JSC Belaruskali, a Belarus-based potash miner and one of the largest producers of potash fertilizers in the world, has declared force majeure, i.e. inability to meet its current contracts and obligations via a letter addressed to its clients, reported Bloomberg.
This absence is set to impact the market adversely, given that potash is a key nutrient for commodity crops like corn and soybeans. Potash also constitutes a major, integral part of fertilisers. And with the soaring fertiliser prices due to already skyrocketing natural gas costs, is bound to worsen global inflation for consumers and make food production more costly.
Already the steep rise has forced many plants in Europe to stop or bring down production. As per media reports, the US Sanctions against Belaruskali OAO, Belarus's only potash miner, came into force on December 8, while penalties against Belarusian Potash Company that exports all the potash from the country, will come into effect starting April 1.
These sanctions come in the wake of Belarusian leader Alexander Lukashenko facing rising U.S. and European Union backlash over his brutal crackdown on widespread mass protests during the disputed 2020 presidential elections. Consequently, US spot prices for potash in the corn belt have almost doubled in the last year.
Potash is the most abundant natural resource available in the country, and its international sales make up for more than 7 percent of the country's export income. Notably, producing around 8 million metric tonnes worth of potash in 2021, only Canada and Russia belie Belarus's generation of the mineral globally, as per USGS estimates in its 2022 minerals commodity summary.
Green Markets data suggests that Belarus exports about 10-12 million metric tons annually, which accounts for a fifth of the global supply. Amongst its major receivers include Brazil, India and China.
Most of these countries are now trying to secure an alternate line of supply. For instance, Brazil is receiving increased quantities of fertilisers from Russia. Even experts in India view this event as not-so threating from the perspective of continued Indian potash supply. Jordan remains an alternate source for India to import potash, they noted.