MARCH 3rd, 2022 – In the ongoing battle for control over Russian fertilizer giant TogliattiAzot (‘ToAZ’), Russian oligarch Dmitry Mazepin and his United Chemical Company Uralchem (UCCU) face contempt proceedings in Irish court for breaking UCCU’s binding commitment to the Irish Court to halt the illegal take-over of ToAZ pending the Irish Court’s judgment in the case. The court is expected to set a hearing date in April, 2022 to address the illegal takeover of the fertilizer giant, ToAZ.
Capping more than a decade long campaign of intimidation, fraud and corruption, Putin ally Dmitry Mazepin forcefully seized control over fertilizer giant TogliattiAzot (‘ToAZ’) this past November from its rightful majority shareholders, the BKIT Companies, and the BKIT’s stake was put up for sale in public auctions in which only proxies for Mazepin were allowed to participate.
As predicted by the BKITs in filings with the Irish court before the forced sales occurred, the rigged auctions were won by Mazepin proxy Khimaktivinvest (‘KAI’). KAI is part of the Uralchem Group. On February 8th, KAI paid 31.55 billion rubles (± $404 million) for 38.74% and on February 18th 25.85 billion rubles (€336 million) for 32% of the shares held by the rightful majority shareholders, the BKIT companies. Just prior to the auctions, the BKIT companies added KAI as defendant in the Irish proceedings and secured their commitment to the court to preserve the shares they purchased in the rigged ‘public auctions’ while the case remains under review by the Irish court. The BKITs believe that those shares were massively undervalued in what it also believes was an illegal auction.
Consolidation of Russia’s Fertilizer Market
Until the wrongful takeover, ToAZ was one of the last remaining major independently-owned companies in Russia and the world’s largest ammonia producer. Most of the company’s ammonia is used as fertilizer in agriculture to grow food in several countries around the world. ToAZ has been designated by the Russian government as being of “strategic economic importance”.
Mazepin’s takeover of ToAZ now makes him one of Russia’s largest players in fertilizer. The raid on fertilizer giant ToAZ followed closely on the announcement that EuroChem, Russia’s second largest fertilizer company by domestic market share, has made an offer to buy the nitrogen fertilizer and chemical assets of Borealis, the Austrian oil and chemical company.
The impact of a consolidated Russian fertilizer industry is already visible. After rising gas prices have caused nitrogen prices to soar, Russia recently announced a six-month limit on exports of nitrogen fertilizers to curb food inflation. And as the Financial Times reported earlier this month, European authorities have expressed concern that fertilizer might become a new Russian geopolitical tool, like oil and gas before it.
Consolidation Challenge
The consolidation of the Russian fertilizer industry is strongly challenged by the BKIT Companies, who consider themselves the rightful majority shareholders of ToAZ. They argue that the takeover of ToAZ is one of the most prominent examples of corporate raiding Russian style, or reiderstvo, which has become an endemic issue in Russia. For the past fifteen years, ToAZ and its management, Board of Directors, shareholders, employees and their families have been victims of an unrelenting campaign of intimidation, false accusations and baseless investigations coordinated by Kremlin insider Mazepin.
