OAO Uralkali is near a deal to buy OAO Silvinit

OAO Uralkali, the largest fertilizer company in Russia, is near a deal to buy OAO Silvinit, its biggest domestic rival with a market value of $ 6.9 million, according to two people with knowledge of the situation.

Uralkali obtained the agreement of the government to create a national champion to compete internationally, said the officials, who declined to be identified because the plan is confidential. The transaction is likely to be announced before year's end, the people said.

Russian billionaire Suleiman Kerimov and partners acquired a controlling interest in Berezniki, based Urals Uralkali and Silvinit between June and August and have been trying to combine the two. The combined group representing 17 percent of world potash production, making it the second largest producer after Canada's Potash Corp. of Saskatchewan Inc., according to Fertecon Ltd., an industry consultant the United Kingdom.

Alexey Sotskov, a spokesman for Uralkali in Moscow and Anton Subbotin, representing Silvinit, declined comment. Dmitry Peskov, a spokesman for Prime Minister Vladimir Putin, said the prime minister is "informed of the merger in progress" and declined to comment on any government approval.

The world's largest potash eight miners whose control market already exceeds that of oil cartel OPEC has been trying to strengthen his control over the prices of crop nutrients. BHP Billiton Ltd. last month rejected an offer of $ 40 billion for Potash Corp. following opposition from lawmakers in Canada.

Price earnings

With the world population, adding 75 million people a year, the demand for food is able to put more pressure on crops, increasing the need for fertilizers. Consolidation among producers of potash, a form of potassium used to increase yield by helping plants resist dry soil, has caused concern in countries like India, the largest importer last year, prices will rise.

A fivefold increase in potash prices in 2007-2008 resulted in at least eight class-action lawsuits in the U.S. most of collusion, a charge denied to producers. Potash was one of the latest products to immerse themselves in the global recession as suppliers to cut production to support prices. Potash Corp. used a third of its capacity last year, while none of its seven biggest rivals use over 80 per cent and Potash Corp. Fertecon data show.

Kerimov directly owns 25 percent of Uralkali through its holding Kaliho Finance Ltd., and together with partners controls 53 percent, Uralkali said in June.

The billionaire owns 25 percent of Silvinit, the newspaper Vedomosti. Their control extends to 69 percent when accounting for 44 percent stake acquired by its partners in August, a person familiar with the purchase, said at the time.