EXCLUSIVE India could buy potash from Belarus in rupees as sanctions hit Minsk sources

A trader talks on his mobile phone next to a bag full of potash for sale in Kolkata, India February 17, 2016. REUTERS/Rupak of Chowdhuri

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MUMBAI, Feb 2 (Reuters) – India plans to buy 1 million tonnes of potash from Belarus in the first such bilateral deal between the two countries after sanctions crippled Minsk’s ability to sell fertilizer, two Indian officials involved in the talks told Reuters.

India has suggested that the state-owned Belarus Potash Company (BPC) could open a rupee account with a state-run Indian bank for potash sales, sanctions imposed by the United States and l European Union cutting off Minsk from dollar and euro trade, officials said.

BPC is the export subsidiary of Belaruskali, the world’s second largest potash producer. The United States blacklisted Belaruskali and added BPC to its sanctions list as the West stepped up its punitive actions against Belarusian President Alexander Lukashenko.

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BPC did not respond to a request for comment.

Potash exports are an important source of foreign exchange for Minsk. Read more

“We are not able to make payments in dollars or euros because of the sanctions. We have to import potash and we are finding options to make payments,” said a senior Indian official involved in negotiations with Belarus.

India could buy 1 million tonnes of potash in 2022 from BPC by paying in rupees, said another official, who also declined to be named due to the sensitivity of the matter. The two said the deal could be sealed in February.

New Delhi paid Iran rupees for crude oil after the United States imposed sanctions on Tehran, which used the rupees to buy rice and other goods from India.

The Indian government did not immediately respond to a request for comment.

India secures nearly all of its potash through imports, and historically around a fifth of the 4-5 million tonnes it imports each year comes from Belarus.

Minsk could offer a discount from benchmark prices as India has offered to buy at least 1 million tonnes of potash, the first official said.

India’s exports to Belarus stood at $62.3 million in the 2020/21 financial year, while its imports stood at $107.4 million, according to government data.

India’s push for a deal comes even as Belarus was this week forced to divert potash shipments from the Lithuanian port of Klaipeda to Russian ports after Vilnius decided to suspend use of its route of iron for exports of the goods from the sanctioned country.

It is unclear how this might affect or delay potential potash exports to India this year.

THE WIN-WIN SITUATION

Potash imports from Belarus would help both countries, industry officials said.

Belarus is struggling to sell potash, while India is scrambling to contain a price hike after potash prices hit their highest level in more than a decade, an official said. the Mumbai-based company, speaking on condition of anonymity due to sensitivity. of the material.

India subsidizes purchases of imported potash to make it more affordable for its farmers. The Indian government, in its annual budget, on Tuesday allocated about 1.05 trillion rupees ($14 billion) to its fertilizer subsidy scheme, which is largely used for potash and phosphate imports.

About 150,000 tonnes of potash shipments from Belarus have been blocked due to payment issues, two company officials said.

“These are contracts that were signed at lower prices last year. Shipments are blocked because we couldn’t make payments,” another company official said.

BPC agreed to supply potash to India at $247 a tonne in early 2021, but later renegotiated the price to $280. The commodity trades at around $650 a ton in the spot market, although annual contract purchases by India, China, Brazil and other big buyers are generally at lower prices. nL1N2LY0DM

India’s potash imports fell sharply in 2021 due to rising prices and stocks need to be replenished quickly, the Mumbai-based company’s official said.

India’s potash imports in the first eight months of the 2021/22 financial year fell 47% from a year ago to 2 million tonnes, according to government data.

Canada, Belarus, Russia and Israel are India’s main potash suppliers.

BPC competes with Canada’s Nutrien Ltd (NTR.TO), Russia’s Uralkali, Israel’s ICL (ICL.TA) and Mosaic (MOS.N) from the United States.

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Reporting by Rajendra Jadhav; Additional reporting by Polina Devitt in MOSCOW; Editing by Euan Rocha and Gerry Doyle

Our standards: The Thomson Reuters Trust Principles.

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