Onexim mulling stake in Russian potash giant Uralkali

Russian billionaire MikhailProkhorov'sinvestment groupOneximhas joined a list of potential bidders for a stake in the world's largestpotash producer,Uralkali,as the search continues for a peacemaker to end a row between Russian and Belarusian potash exporters that hasdisrupted the global market in the valuable fertilizer component.

The Bloombergnews agency reported on Wednesday that tycoon-turned-politicianProkhorovwas considering buying the Uralkali stake owned by his former business partnerSuleimanKerimov.

Kerimov, Uralkali's biggest shareholder, has come under pressure to find a new owner forUralkaliafterthe company in July quit a sales cartel with state-ownedBelaruskalithat had controlled two-fifths of the world market and after its CEO,VladislavBaumgertner, was arrested by Belarusian authorities last month.

The dissolution of the joint venture, known as theBelarusian Potash Company (BPC), threatens to push potash prices down 25 per cent, a massive blow to the fragile economy of Belarus, which relies on exports of potash, a major fertilizer ingredient, for 12 per cent of state revenue.

UralkaliCEO under house arrest

Baumgertnerwas arrested last month by Belarusian authorities who accuse him of abusing his powers. Hepotentially faces10 years in jail on charges that heand others atBPC gave discounts on product to some buyers without tellingtheBelarusians, redirected ships to takeUralkaliproduct instead ofBelaruskali'sand cancelledsomeBPCcontracts, promising partners aUralkalialternative at lower prices.

Baumgertner spent a month in a Soviet-era prison in theBelarusiancapital,Minsk, before being released Thursday.

His lawyer,Dmitry Goryachko, said hisclient was released and takento a rented apartment in Minsk under the surveillance of the KGBintelligence agency.

Uralkalihas denied any wrongdoing and has said previously that Baumgertner did not have the powers the Belarus authorities say he abused but his arrest has increased the pressure for a change of ownership that could bring about a reconciliation.

A search is underway for a buyerwho would be acceptable to the Kremlin and who could "pour oil on troubled waters," one financial source familiar with the situation said.

The source stressed, however, that Kerimov, who owns a 21.75 per cent stake inUralkalithrough his foundation and together with his partners,FilaretGaltchevandAnatolySkurov, controls 33 per cent ofthe company,is not under pressure to sell.

Prokhorov, a metals and banking tycoon who owns the Brooklyn Nets pro basketball team, ran against Vladimir Putin in last year's presidential votebut is widely seen as a card-carrying member of Russia's establishment.

Onexim declined to comment, as did Kerimov's investment company, Nafta.

Three sources familiar with the matter told Reuters that nothing had been decided so far, with one adding: "Everybody is going around in circles."

Two of the sources said Kerimov and his partners wanted a premium for the assetwhile the potential buyers were seeking a guarantee that good relations with Belarus would be restored.

"It's an attempt to organize a beauty contest," one source said.

Chinese wealth fund bought 12.5% stake

Chinese sovereign wealth fund China Investment Corp. acquired a 12.5 per cent stake in Uralkali, via a bond exchange deal on Tuesday. The deal was triggered when Uralkali's market value fell below $20 billion, a level that could serve as a benchmark for future deals.

Analysts say the Chinese deal, on behalf of a country that is the world's top potash importer, might complicate attempts to revive the Russia-Belarus potash cartel

Prokhorov joins a roll-call of candidates that have been linked in press reports to Uralkali, including Norilsk Nickel, the Arctic miner run by Vladimir Potanin another former partner. Norilsk has denied any interest.

Also linked to the stake has been Vladimir Evtushenkov, majority owner of telecoms-to-oil conglomerate Sistema.

Evtushenkov has also denied his interest and, in an interview on Wednesday, CEO Mikhail Shamolin told Reuters that Sistema was not considering any offers.

Political meetings ongoing

Political contacts between Moscow and Minsk have intensified this week, with Russian President Vladimir Putin meeting his Belarusian counterpart Alexander Lukashenko on the fringes of a regional summit on Monday.

Prime Minister Dmitry Medvedev told reporters on Wednesday he would discuss the matter with the Belarusian primeminister Mikhail Myasnikovich.

It was Myasnikovich who invited Baumgertner to a meeting on Aug. 26 after which the Uralkali CEO was detained, triggering public protests by the company's chairman, former Kremlin chief of staff Alexander Voloshin.

"[We]will [discuss]everything, of course, definitely," Medvedev told reporters in Astana, the capital of Kazakhstan.

Uralkali shares were up 1.4 per cent in Moscow, outperforming a 0.8-per cent rise on the Moscow index.