Julia Payne

LAGOS, (Reuters) – Nigeria purchased emergency supplies of Canadian potash after it was unable import its key fertilizer from Russia because of Western sanctions. This decision was made by the NSIA sovereign investment authority.

Uche Orji is the NSIA’s head, but he declined to discuss prices. According to Argus Media (commodities pricing agency), spot prices are higher than 25% for west Africa deliveries today, a blow that further hurts the country’s finances.

    The move shows one of many unintended negative consequences of sanctions to punish Russia for its invasion of Ukraine, which it calls a “special military operation”.

    The International Monetary Fund said last week that the invasion had delivered a further “huge negative shock” to sub-Saharan Africa, driving food and energy prices higher and putting the most vulnerable people at risk of hunger.

    The extra pressure comes as many countries are still reeling from the protracted COVID-19 pandemic.

    Nigeria has for years been battling double-digit inflation, which quickened to 15.92% last month, and its population of 200 million will face even higher food costs this year and the next as the agricultural sector passes on the higher costs of imported wheat, diesel and fertilizer.

    “Russia was unable to deliver so we bought spot from traders in Canada. Orji explained that it was the Canadian High Commission Nigeria which helped to start conversations with producers.

NSIA deals with importers of fertiliser materials, such as potash. This is part of the Nigerian government’s plan to improve its production capacity for blended fertilizer.

Orji stated that Nigeria had enough potash stocks to meet 40% of the blending demand. He purchased three containers of Canadian potash and they should be arriving within the month. Normally, Nigeria receives five Russian cargoes annually.

    Western sanctions and self-sanctioning by many global companies and financial institutions has created chaos for anyone dealing in products of Russian origin and sent many energy and commodity prices to record highs.

    Russia’s Uralkali, a major global producer of the crop nutrient, has been Nigeria’s exclusive supplier since 2019.

    Uralkali declined comment. Canadian authorities did not immediately respond to our request for comment.

    The potash producer has not itself been targeted by sanctions so far but Russian businessman Dmitry Mazepin left the board and cut his controlling stake in Uralchem after he was hit by EU sanctions in March. Uralchem controls the majority of Uralkali.

    Orji said there were ongoing discussions to see if a Russian delivery could still be made.

    The price of potash has been on the rise since last year after the EU imposed some sanctions on Belarus, the world’s third biggest producer after Russia and Canada.

    The price skyrocketed in early March following financial sanctions on Russia, hitting a record $1,125 per tonne at the end of April for product on a delivered basis to South Africa, according to commodity pricing agency Argus Media. Together, Russia and Belarus account for 38% global potash supply, although this is now in doubt.

According to FEPSAN, Nigeria imported around 200,000 tonnes potash in 2013. This is one of the three essential ingredients needed for fertilizer mixing. Nigerian raw material imports only cover about 40% of Nigeria’s requirements. All the other ingredients are sourced locally. Last year’s local blended output reached 1.5 million tonnes, almost equivalent to Nigeria’s domestic consumption.

    “The Canadian potash will hopefully arrive just in the nick of time for the planting season, which starts as early as end-May in some parts,” FEPSAN executive director Gideon Negedu said, adding the association has a strategy to prioritise crops that need more potash.