The global potash cartel just broke up on Tuesday when Uralkali, the major Russian player, announced that it just ended its export partnership while accusing its former Belarus partner of operating outside their deal.

Uralkali, which controls 43% of global exports, decided to channel its trading through its own unit, Uralkali Trading. The sudden move could cause prices of potash to go down to less than $300 a tonne.

Prices of potash, a nutrient used in fertilizer, had gone down in 2013 because of a huge inventory in China, low import volumes in India and abundant inventories elsewhere.

The second cartel, Canpotex, is made up of the Potash Corporation of Saskatchewan, The Mosaic Co and Agrium Inc.

Following the development in Russia, the Potash Corp of Saskatchewan reduced its 2013 earnings forecast by up to 20 per cent last week because of the price decline. Share prices of these companies plummeted due to forecast that potash prices could go down by about $100 a tonne without the two cartels in operation.

Shares of Potash Corp tumbled down 23 per cent, Mosaic 17 per cent and Agrium 5 per cent.

Potash mining contributes 2 per cent to Saskatchewan's economy and 0.1 per cent to the Canadian economy, while potash exports accounted for 1.e per cent of Canada's total exports in 2012.

Paul Ferley, assistant chief economist of the Royal Bank of Canada, said that the collapse of the Russian cartel and lower projection of potash prices would hit Saskatchewan in terms of reducing mining and construction.

He said that an assumption of double-digit drop in potash productions for the remainder of 2013 would result in zero growth for the province's mining sector and lead to reduction of Saskatchewan's GDP by 1 per cent.

Potash is the most active listing in the Toronto Stock Exchange, and it lost close to one-sixth of its market value, dropping 16 per cent to C$32.66. Since 2010, over 103 million shares of potash stock have changed hands.

Michael Sprung, president of Sprung Investment Management, described the break up of the Russian cartel as a rout, worsening the bad hit that the commodity suffered in 2013 due to weak environment.

Elena Sakhnoba, analyst of VTB Capital in Moscow, said, quoted by Financial Post, "Uralkali's announcement completely turns the global potash market upside down ... If previously global potash producers were acting like an oligopoly, working with the rule that benefited higher potash prices over shipped volumes, now the market will be fully competitive."

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