Uralchem, one of the world’s leading manufacturers of nitrogen, potash and complex fertilisers, aims to purchase the Russian assets of global leading grain traders Cargill and Viterra, Dmitry Konyaev, general director of Uralchem said in a letter to Russian President Vladimir Putin.
Both companies plan to suspend operation on the Russian market in 2023, Konyaev said, adding that the takeover had been preliminarily approved by the Russian Agricultural Ministry. Cargill and Viterra grain export business largely overlaps with Uralchem’s fertilisers trade: the same port infrastructure is used for shipments and vessels of similar type used for transportation.
Konyaev asked the president to support the proposal and instruct the government commission for the control of foreign investment to give Uralchem permission for transactions.
The Russian newspaper Kommersant, however, reported that both Cargill and Viterra denied plans of pulling out from the Russian market in 2023.
For instance, Cargill told the Agricultural Ministry it was working as usual, there were no plans to leave the country, and no negotiations on the sale of the assets were taking place. Nikolay Demyanov, Managing Director of Viterra Rus, also said that the company continues to export from Russia and does not intend to sell assets.
If [Cargill and Vitarra] they wanted to, they would have left earlier
On the other hand, there are looming fears that global grain companies will be forced to leave the Russian market. At the end of September, Andrey Kostin, head of the Russian major state bank VTB, appealed to Putin to ban companies from the so-called ‘unfriendly countries’ from buying and reselling Russian grain, including for export, as well as owning transhipment and storage facilities in the country.
In early December, however, Russian Agricultural Minister, Dmitry Patrushev, speaking about this proposal, claimed that Russia did not intend to “kick out” international grain traders.
Alexander Korbut, vice president of the Russian Grain Union, told to the Russian publication Agroinvestor that he was not sure that the takeover of the Cargill and Viterra’s assets by Uralchem would eventually take place. “If [Cargill and Vitarra] they wanted to, they would have left earlier,” Korbut said, adding for Uralchem, the deal makes sense in light of anticipating the lifting of informal sanctions hampering the Russian agricultural export.
The deal falls under a new government decree, under which Russian companies are required to seek permission from the government commission on foreign investments for the takeover of assets with foreign ownership. The appeal to Putin could be done to get the permission quickly, Olga Romanov, partner of legal firm Ratum Legal Group, told Agroinvestor.