The Moscow Arbitrazh Court upheld Dorogobuzh’s claim and forced Silvinit to sign a long-term potash supply contract on the terms proposed in Dorogobuzh’s draft contract. The draft contract includes a pricing formula providing for annual adjustment of the potash price in line with the Russian industrial producer price index for the preceding year. The potash price for 2010 is set based on the 2009 price (RUB 3,955 t), which is increased by the Russian industrial producer price index for 2009. Annually, Dorogobuzh buys 150,000 t of potash.
Background: In October 2009, Dorogobuzh filed a claim asking the court to force Silvinit and Mineral-Trading to sign a five-year potash supply contract. In its claim, Dorogobuzh asserted that, as a potash market dominator under the provisions of the Competition Protection Law, Silvinit may not back out or refuse to sign a potash supply contract with Dorogobuzh without adequate economic or technical reasons for doing so.
Acron Senior Vice President Alexander Popov commented on the award:
“We are satisfied with the arbitration decision. Yet again this proves that independent companies have justified complaints about monopoly producers of mineral fertiliser inputs. We regret that Silvinit has ignored all attempts to settle the issue of potash supplies to complex fertiliser producers, including decisions by the Russian Federal Monopoly Service and the Government. It is obvious that Silvinit’s unreasonable refusal to conclude a direct long-term contract with Dorogobuzh creates a potash deficit on the Russian market and triggers higher prices.”