OREANDA-NEWS. April 08, 2010. A lower potash price should make it easier for Acron and Dorogobuzh to lower production costs and boost EBITDA and net income.

Following protracted negotiations, Acron and Uralkali have at long last signed a contract for 2010 potash deliveries. The contractual volume is set at 450,000 tons for the whole of 2010, while the contractual price is fixed at RUB 4,300 ton (USD 147 ton). What is important is that the contract contains no proviso that the contractual price be revised should the Russian government place an export duty on potash chloride.

The news signifies a victory for Acron in its standoff with potash companies, as the new price is 9.5% below the original price dictated by potash companies. Early in the year, Silvinit announced a 2010 price for domestic customers of RUB 4,750 ton (up 20% on its level in 2009). PhosAgro and EuroChem, Silvinit’s Russian customers, have already signed contracts at this price. Acron and UralChem went to court to challenge the price hike and finally secured a lower price for themselves. Lower potash prices will make it easier for Acron and Dorogobuzh to cut production costs and boost EBITDA and net income.