Key Potash Sources Go to Silvinit

Silvinit, the country's biggest producer of potash, beat rival Uralkali and five others for the right to develop one of Russia's biggest untapped sources of the soil nutrient, the Natural Resources Ministry said Wednesday.

Silvinit paid 35.1 billion rubles ($1.48 billion) for the rights to three untapped sites at the Verkhnekamskoye potash field, the ministry said in an e-mailed statement. The potash producer bid through its Kamskaya Mining venture with Oboronimpex, a unit of state arms trader Rosoboronexport.

"The sale is a key event in the global potash mining industry that will significantly alter the landscape not only of the domestic sector but also of the global market," Troika Dialog analyst Mikhail Stiskin said in a note to investors. "Silvinit bid fiercely to get this key asset."

The auction offered three lots that may bring 9 million tons of potash fertilizer to the market from 2016, almost as much as Russia's two existing producers, Silvinit and Uralkali, produced last year. The price for the nutrient, used to protect crops from dryness and disease, has doubled in 12 months on shortages in India and China.

Silvinit rose 7.5 percent in Moscow trading to close at 1,075 rubles. Uralkali depositary receipts dropped $1.30, or 3.5 percent, to $35.80 each in London.

Silvinit said it could continue supplying carnallite to Russian titanium producer VSMPO-Avisma because of the auction. Rosoboronexport owns 66 percent of VSMPO-Avisma. Carnallite, often found in silvinite ore together with potassium, is needed to make some titanium products.