MOSCOW, (PNA/RIA Novosti) -– A Chinese sovereign wealth fund has acquired a 12.5 percent stake in Uralkali, the Russian fertilizer giant currently embroiled in a highly politicized dispute with its Belarusian counterpart, according to a statement released by Uralkali on Tuesday.
The deal makes Chengdong Investment Corporation (CIC) the second largest shareholder in Uralkali, after Russian billionaire Suleiman Kerimov, who has a 21.75 percent holding.
It is not the first time that CIC has worked alongside Kerimov – the fund took a 5 percent stake last year in gold miner Polyus Gold, where Kerimov is a majority shareholder – but it is a relatively rare example of a Chinese fund entering the ownership structure of a Russian natural resources company.
Russia’s Uralkali, listed in both London and Moscow, is the world’s biggest producer of potash, and emerging markets with rapidly expanding populations – like China – are the largest consumers of potash-based fertilizers.
CIC received its stake by exercising its right to convert bonds, due to mature in 2014, into shares. The bonds were issued last year by Wadge Holdings, an investment vehicle partially controlled by Kerimov. CIC’s 12.5 percent stake in Uralkali on Tuesday was worth about 63.4 billion rubles (2 billion dollars).
Uralkali has been in open conflict with Belarusian potash producer Belaruskali since July when Uralkali dissolved an international cartel within which the two companies were cooperating, a move that caused a sudden drop in the value of potash producers worldwide and sent fertilizer prices tumbling.