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Lukashenko's hopes of lifting sanctions on potash are dwindling along with fertilizer prices


Pavel Latushka: Deputy Head of the United Transitional Cabinet of Belarus, Head of the NAM, Ambassador

The recent quarterly report published by Nutrien, the leading global producer of potash fertilizers, has drawn the attention of NAM economists.

The report revealed that Nutrien's earnings for the third quarter of 2023 fell below international analysts' expectations, resulting in a significant decline in the company's stock price. The question arises: what caused these financial consequences? Despite a 23% increase in sales volumes, surpassing analysts' forecasts (3.9 million tons sold compared to the average forecast of 3.5 million tons by five analysts), Nutrien's profits have been negatively impacted.

According to the company, the primary factor contributing to the decline in profits is the plummeting prices of potash fertilizers. The report indicates that the average price for potash fertilizers in the third quarter of this year was $250 per ton, a stark contrast to the $633 per ton figure seen a year earlier. Tм Net potash sales amounted to $972 million, falling short of the estimated $1.03 billion. This represents a staggering 51.5% year-over-year decline in Nutrien's revenue.

This situation is noteworthy for two key reasons.

Firstly, it suggests that Belaruskali, a major player in the global potash fertilizer market, though not as significant as Nutrien, is facing significant financial losses. Sanctions and logistical challenges have forced Belaruskali to incur additional costs and reduce prices to remain competitive. Consequently, Belaruskali's net income is likely to have dropped to only 20-25% of its previous levels, casting doubt on the resilience claims made by Lukashenko and Golovaty for both Belaruskali and the overall economy, which has been under inept manual control for nearly 30 years.

Secondly, this turn of events completely undermines the argument put forth by lobbyists supporting the easing of sanctions against Belaruskali. These lobbyists contend that the global shortage of potash fertilizers necessitates the lifting of sanctions. They claim that these shortages drive up fertilizer prices, which, in turn, impact food security by driving up prices and exacerbating hunger in African countries. However, the current market dynamics, where potash fertilizer prices are significantly lower than in previous years even without Belarus' participation, undermine this lobbying position.

Consequently, we can draw the following conclusions:

  1. Sanctions are effective, and they should be maintained. Lukashenko's regime will continue to suffer losses due to the restrictions imposed by democratic nations.

  2. The pressure on the dictator and his system intensifies. This is further underscored by the audacious statement made by General Muraveiko, the First Deputy Secretary of State of the Security Council, who advocated for a "forced corridor" to Baltic ports.

  3. Advocates for lifting sanctions on potassium currently lack arguments to support their position that potassium prices are high, hindering the meeting of African countries' needs.

  4. The general decline in opportunities for selling Belarusian potash fertilizers on the global market, resulting from the sanctions imposed by the EU and the USA, is exacerbated by the record-low price of potash worldwide.

  5. The logistics of supplying Belarusian potassium through Russian ports and Russian Railways are not only limited due to Russia prioritizing its own interests in utilizing the infrastructure but also due to the high costs incurred by taking longer and more expensive routes, significantly eroding Belaruskali's profit margins.

Therefore, it would be in Lukashenko's best interest to abandon attempts to ease sanctions and instead focus on fulfilling the demands voiced by Belarusian society as far back as 2020.


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