Nigeria bought emergency supplies of Canadian potash in April after the country was unable to import the key fertiliser ingredient from Russia due to the impact of Western sanctions, the head of Nigeria’s Sovereign Investment Authority (NSIA), Uche Orji, has disclosed.
Although he declined to comment on prices, however, spot prices yesterday were up more than 250 per cent for deliveries to West Africa compared to last year, according to commodities pricing agency Argus Media, dealing a further blow to the country’s finances.
Reuters reported that the move showed one of many unintended negative consequences of sanctions to punish Russia for its invasion of Ukraine, which it calls a “special military operation”.
“Russia was unable to deliver so we bought spot from traders in Canada. The Canadian High Commission in Nigeria helped start the conversation with producers,” Orji told Reuters.
NSIA negotiates imports of raw fertiliser materials like potash as part of the Nigerian government’s programme to develop its capacity to produce blended fertilizer.
Orji said Nigeria has enough potash inventories to cover 40 per cent of blending demand and bought three cargoes of Canadian potash, which should arrive within the next month. Normally, the country takes five Russian cargoes a year.
Western sanctions and self-sanctioning by many global companies and financial institutions has created chaos for anyone dealing in products of Russian origin and sent many energy and commodity prices to record highs.
Last week, the Minister of Finance, Budget and National Planning, Zainab Ahmed, speaking with Bloomberg Television, had attributed the rising prices of fertiliser to the scarcity of potash, stressing that the government was doing everything to ameliorate the impact.
“The Ukraine Russia war is causing another wave of global economic distortion and we are very much affected in the sense that energy prices are high which comes with increasing transportation costs, which is also reflecting in the cost of food,” she noted.
According to the minister, as a fertiliser-producing country, it has been tough getting the key ingredient in the production of the agricultural commodity, which has led to skyrocketing prices.
“And also, for Nigeria as a producer of fertiliser, one of the major inputs for fertiliser production, potash, is also affected. Now it is scarce and that means that the input is very expensive and we are seeing that reflecting in the cost of fertiliser.
“As a government, we are looking at how to mitigate this high cost to support the fertiliser producing companies so that the price of the commodity is not too out of the reach of the common man who are the farming population,” the minister explained.
The International Monetary Fund (IMF) said last week that the invasion had delivered a further “huge negative shock” to sub-Saharan Africa, driving food and energy prices higher and putting the most vulnerable people at risk of hunger.
The extra pressure comes as many countries are still reeling from the protracted COVID-19 pandemic, Reuters indicated.
Nigeria has for years been battling double-digit inflation, which quickened to 15.92 per cent last month, and its population of 200 million will face even higher food costs this year and the next as the agricultural sector passes on the higher costs of imported wheat, diesel and fertiliser.
Russia’s Uralkali, a major global producer of the crop nutrient, has been Nigeria’s exclusive supplier since 2019. Uralkali declined comment. The Canadian government did not have an immediate comment.
The potash producer has not itself been targeted by sanctions so far but Russian businessman Dmitry Mazepin left the board and cut his controlling stake in Uralchem after he was hit by EU sanctions in March. Uralchem owns the majority of Uralkali.
Orji said there were ongoing discussions to see if a Russian delivery could still be made.
The price of potash has been on the rise since last year after the EU imposed some sanctions on Belarus, the world’s third biggest producer after Russia and Canada.
The price skyrocketed in early March following financial sanctions on Russia, hitting a record $1,125 per tonne at the end of April for product on a delivered basis to South Africa, according to commodity pricing agency Argus Media. Combined, Belarus and Russia account for 38 per cent of global potash supplies, which are now uncertain.
Nigeria imported about 200,000 tonnes of potash last year, one of three key ingredients for fertiliser blending, according to the local Fertilisers Producers Association of Nigeria (FEPSAN).
Nigeria’s raw material imports meet just under 40 per cent of Nigeria’s needs, the rest is sourced domestically, and local blended output was 1.5 million tonnes last year, nearly equal to domestic consumption.
“The Canadian potash will hopefully arrive just in the nick of time for the planting season, which starts as early as end-May in some parts,” FEPSAN Executive Director, Gideon Negedu said, adding that the association has a strategy to prioritise crops that need more potash.
Culled from THISDAY