Potash buyers fretting over US sanctions on Belarus’s state-owned producer, which controls about a fifth of the global market for the crop nutrient, might not need to panic right away.

The penalties announced on Monday target Belaruskali, which ships much of its products to China, India and Latin America, along with more than a dozen companies with ties to President Alexander Lukashenko. Yet Belarusian Potash, in which Belaruskali owns a 48% stake and which is the sole handler all of the country’s potash exports, wasn’t included in the sanctions list.

While some buyers may turn to other suppliers following the sanctions, China and India might still feel it’s safe to purchase from BPC, the company that signs export deals, according to VTB Capital. The US issued licenses allowing counterparts to wind down transactions with Belaruskali -- or any entity in which it owns at least a 50% interest -- by December 8, giving consumers time to find alternative supplies.

“The penalties against Belaruskali add negative sentiments for the global potash market, but the fact that BPC is not the subject of the sanctions may ease the situation,” said Elena Sakhnova, an analyst at VTB Capital.

BCS Global Markets analyst Kirill Chuyko also said it may be safe to continue dealings with BPC, as long as it’s not added to the sanctions list.

A spokeswoman for BPC wasn’t immediately available to comment.

POTASH MARKET
Potash is one of Belarus’s key exports and its only abundant mineral resource. Prices of the fertilizer have climbed this year as higher crop prices helped boost farmer spending on soil nutrients. The sanctions announced Monday could prompt further gains in potash prices, and could be benefit North American potash producers like Nutrien and Russia’s Uralkali, Sakhnova said.

It’s not the first time the US has targeted a major commodity producer key to the global market. Russian aluminum giant United Co. Rusal International PJSC spent about a year under similar sanctions in 2018, roiling the sector around the world.

Still, Rusal was able to sell metal to existing long-term clients under licenses issued by the US Office of Foreign Assets Control, which were extended several times.

“It can’t be excluded that Belaruskali’s license will be extended too,” VTB’s Sakhnova said.