Belaruskali workers attended a meeting Monday to discuss possible strike action.
Photo: vasily fedosenko/ReutersWorkers at the world’s largest miner of potash are joining widespread protests against Belarus President Alexander Lukashenko, intensifying pressure on the embattled leader and threatening to disturb the market for a key fertilizer.
JSC Belaruskali controls up to 20% of the global supply in potash, meaning any extended strike action or disruption at the company could impact prices of a commodity widely used by farmers to help plants grow. The state-owned mining company is also a pillar of Belarus’s economy and a major source of taxes and foreign currency, making it important for Mr. Lukashenko.
On Monday, a person familiar with the matter, as well as local and Russian state-owned media, said that some miners at Belaruskali had joined the protests and strikes that have erupted after the country’s Aug. 9 presidential election, whose results are disputed after Mr. Lukashenko claimed 80% of the vote.
“That might be the killer blow for Lukashenko,” said Tim Ash, emerging-market strategist at BlueBay Asset Management, referring to the economic significance of Belaruskali.
It isn’t yet clear whether the company’s potash production has been affected so far. Representatives of Belaruskali couldn’t immediately be contacted for comment.
On Friday, the company that markets Belaruskali’s potash issued a statement on behalf of the miners, calling for an immediate end to violence committed against protesters.
“We can’t remain indifferent to what is happening now,” the statement from Belarussian Potash Co. said. “Violence is never justified.”
Scotiabank estimates that a two-week strike at Belaruskali would reduce quarterly global potash production by 3.5%.
Because potash is mostly sold in long-term contracts, rather than in a spot market like most other commodities, it is difficult to see an immediate impact on its price.
Belaruskali controls up to 20% of the global supply in potash.
Photo: vasily fedosenko/ReutersHowever, the share prices of large potash producers have increased since the disputed election in Belarus, with Canada-based Nutrien Ltd NTR 0.96% up around 7% and Israel’s ICL Ltd. up about 5%.
Changes in the price of potash affect farmers’ costs. For instance, a 25% drop in potash prices can save the average U.S. corn farmer about $10 an acre in production costs, which would cut total costs by 3% from around $330 an acre for many producers, St. Louis-based NPK Fertilizer Advisory Service has previously calculated.
Fertilizers make up an even bigger percentage of farmers’ costs in developing markets.
Still, price fallout from the situation in Belarus could be limited by the fact that the potash market has been oversupplied for years, analysts said.
For a decade through 2009, the price of potash increased by around five times on the expectation that demand would soar as populations grew and diets improved in emerging markets like China and India. But that demand boost failed to materialize, while mine capacity grew to meet the expected rise. Potash currently trades at between $220 and $275 a metric ton, depending on the sales contract, around a quarter of its peak of $860 in early 2009.
The market is dominated by a few big players, including Belaruskali, Nutrien and Russia’s Uralkali JSC.
Belaruskali, which runs six mines, produced 1.14 million metric tons of potash in July, a record for monthly output.
The company’s massive Soligorsk mine operates at 2,000 feet below ground, where workers drill at the seams of pinkish rock. Potash is a compound of potassium, which, along with nitrogen and phosphorous, is essential for plant life. It strengthens plants and makes them more resistant to disease.
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—Georgi Kantchev and Anna Isaac contributed to this article.
Write to Alistair MacDonald at alistair.macdonald@wsj.com
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