Russian billionaire Andrey Melnichenko, whose fertilizer company is investing more than $6 billion in potash mining, said it could take at least a decade for the potash market to work off the excess because of the past “disruptive” actions by the largest sellers.
Potash prices have collapsed since 2013, when a trade pact between Russian and Belarusian producers, which helped prop up the market, fell apart. At the time, Canpotex Ltd., a Canadian potash exporter, and Belarusian Potash Co. controlled about 80 percent of global exports.
Their tactics kept prices at high levels, which encouraged new investment from other companies and led to excess supply, said Melnichenko, who owns EuroChem Group AG and is Russia’s eighth-richest man, according to estimates from the Bloomberg Billionaires Index. Potash fell to a decade low of about $220 to $230 a ton this year on continued oversupply. In 2008, it reached above $900 a ton.
EuroChem expects to weather the downturn because its potash production, due to start next year, will pay some of the lowest costs in the industry and the company has diversified into other products and more complex services, Melnichenko said.
“Producing only commodity fertilizers and selling it to a trader doesn’t work anymore,” Melnichenko said in an interview at Bloomberg’s offices in London. “The market is becoming more sophisticated. Farmers are learning to use data and analyze it. That’s why we should offer something smarter.”
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