Makers of potash, a fertiliser widely used in developing countries, may be about to start competing on price. That this outcome now seems likely is no thanks to western regulators – on the contrary, the Canadian government has previously acted to prevent it. Instead, it follows a spat between a Russian miner and a subsidiary of the Belarusian state oil company. It is a sorry story, even if the outcome is welcome.
The potash market is dominated by two cartels – one in Canada, the other in Russia and Belarus – which keep prices high by limiting output. The Canadian cartel, Canpotex, came under threat in 2010 when PotashCorp, its largest member, became the target of a hostile takeover attempt by BHP Billiton. BHP planned to withdraw from the cartel in order to profit from huge volumes as it opened new mines. But Tony Clement, the then Canadian industry minister, blocked the deal, saying it “did not represent a net benefit to Canada”.
Even if that contention was correct, his decision was shameful. Canpotex is exempt from Canadian antitrust regulations because it controls only the export business of its members. Canadians have therefore enjoyed a competitive market for potash, while also receiving a share of the profits the cartel extracted from foreign farmers, most of them in countries far poorer than Canada.