By Leia Michele Toovey- Exclusive to Potash Investing News

Share In anticipation that its 2010 potash sales will increase by 50 per cent, Russian based Belarusian Potash Co (BPC) has hiked the price it charges for the nutrient. BPC customers in Brazil and Asia can expect to pay $410 per tonne of standard grade potash, up from $385 per tonne.

Just months ago, BPC, which accounts for about 30 per cent of global potash sale, was wildly criticized for inking a deal with China for $350 per tonne.  In fact, last week the CEO of Potash Corp of Saskatchewan critiqued the $350 deal, claiming that Russians are “inexperienced marketers” who have “proven to be a bit of a panic seller.”

Canpotex, the marketing arm for major North American potash producers Mosaic, Potash Corp of Saskatchewan, and Agrium, refused to sign a deal with China for the rock bottom price.  To date, negotiations are still taking place. According to analysts, Canpotex made the right move in holding out for the anticipated rebound, as it appears that the much anticipated rebound is underway.

“Current crop prices in the United States and abroad support fertilizer application,” Bank of Nova Scotia economist and commodity market specialist Patricia Mohr said in a recent report. “We view 2010 as a transition year for potash, with dealers restocking modestly given the reduced ‘risk’ of holding inventories, on the way to stronger market conditions in 2011.”

Potash suppliers sold out of potash for February, as farmers prepare for spring plantings.  These farmers are eager to get their hands on potash supplies as many of them skipped fertilization last year in an attempt to conserve cash.  Now with crop prices across the globe ascending, farmer are eager to get their hands on the yield-increasing ingredient.  According to Credit Suisse analyst Semyon Mironov, the global potash market can expect a large recovery, starting in April, when major planting seasons get under way.

The price hike is the latest signal that farmers have started buying potash and other fertilizers after holding off for much of 2009. Mosaic and Potash Corp estimate that global potash production will reach 50 million tonnes this year. That is up from less than 30 million tonnes last year.

With high commodity prices come thieves; remember the copper heists of 2008? India’s Directorate of Revenue Intelligence (DRI) is the latest to stop some illi activity in its tracks. Detectives raided the Gujarat Pipavav Port on Wednesday and seized Muriate of Potash (MOP), which was being illegally exported.  Around 18 million tonnes of MOP was seized, worth around US$ 1.3 million on the international market. MOP is banned for export as it is imported by the government at subsidized rates for farmers.   DRI officials have yet to verify the exact amount of MOP, or to figure who is behind the illegal activity.

Company News

Lion Energy (TSX-V:LEO) has exercised its rights in an option agreement to acquire a 51 per cent interest in Encanto Potash Corp. Lion energy has spent  C$ 6.5 million advancing Encanto’s potash properties through both seismic and drilling programs with assay results expected in February 2010.

Under the terms of the option agreement, Encanto has the right to repurchase the 51 per cent interest from the company in exchange for the issuance of 26 million shares to Lion Energy, with a deadline of March 14 2010. If a notice is not received by that date, the two companies will enter a joint venture agreement over the properties. The company previously had a 14.76 per cent interest in Encanto.

MagIndustries Corp has signed an agreement with China National Complete Plant Import & Export Co to jointly develop a potash mine in the Republic of Congo. China National will provide a loan of as much as $1.2 billion to help finance construction of the Mengo project, which may have an annual production capacity of 1.2 million tons of potash. China National would have the option to buy a 50.1 per cent stake in the project, leaving MagIndustries with a 39.9 per cent holding, and the Republic of Congo with 10 per cent. China National will have 12 months from the start of an engineering agreement to exercise the option, “at a price to be determined by a mutually agreed third party valuation of the project.”

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