Nigeria’s deal with Russia, involving trade in potash, has been hit by US sanctions, as President Muhammadu Buhari’s administration is forced to trade with Canada.
The Russian government and Nigeria had signed a potash trade agreement in 2019 to import potash from Uralchem, a Russian company. But ever since the global sanction against Vladimir Putin’s country for invading Ukraine, there has been a gap between supply and demand.
Potash is a feedstock for fertilizers, used to resist disease, promote plant growth, conserve water and support crop yield. Its use is also expanding outside of farmland, with manufacturers introducing potash for the production of pharmaceuticals, detergents, ceramics, as well as alternatives to de-icing salt.
The biggest producers are Canada, Russia, Belarus, China and Israel. In 2019, the top three companies accounted for 79% of potash traded globally.
How the sanction affects Nigeria
Before the sanctions, which include blocking international trade, Nigeria usually received about five shipments from Russia, but its inability to import from Putin’s country forced the government to trade with Canada.
Also Read: Dangote plant will reduce dependence on imported fertilizers – Emefiele
According to a Reuters report on Tuesday, Nigeria has imported three shipments of potash, as the government tries to readjust to the global sanction against Russia. The head of the Nigeria Sovereign Investment Authority (NSIA), Uche Orji, had revealed the new trading route.
“Russia was unable to deliver, so we bought spot from traders in Canada. The Canadian High Commission in Nigeria helped start the conversation with the producers. said Orji.
An agreement that will weigh on Nigeria’s finances
The Canadian trade deal is expected to eat into the Nigerian government’s finances, given the year Russia struck the deal with Nigeria, potash traded around $275 a tonne, before depreciating to $200 dollars in 2020 – the year of COVID-19.
However, while the price jumped to $300 per ton last year, the potash market price appreciated 266%, to trade around $1,100 per ton at the end of March 2022, according to Mercopress. .
The rise in prices is linked to the invasion of Ukraine and the sanctions against Russia and Belarus (which have supported Putin’s actions in Ukraine) – as demand increases, the ability of producers to meet the demand decreases.
Given the bottleneck around Russia and Belarus (which both account for 79% of world trade with Canada), this limits potash producers, at full capacity, to Canada, China and Israel , with the three companies closing the gap to reach or exceed the 69.2 million tonnes recorded in 2020.
Join the conversation
Support Ripples Nigeria, Support Solutions Journalism
Balanced and fearless journalism, driven by data, has huge financial costs.
As a media platform, we hold leaders accountable and we will not trade the right to freedom of the press and freedom of expression for a piece of cake.
If you like what we do and are willing to support solutions journalism, please donate to the Nigeria Ripples cause.
Your support would help ensure that citizens and institutions continue to have free access to credible and reliable information for the development of society.