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Russian fertilizer giant PhosAgro accuses US of bad math on phosphate tariff


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Russian fertilizer giant PhosAgro accuses US of bad math on phosphate tariff

The U.S. made a "significant" math error when calculating a recent preliminary tariff on PJSC PhosAgro phosphate shipments to the country, resulting in a doubling of the proper rate, the Moscow-listed fertilizer giant said in a Nov. 30 filing obtained by S&P Global Market Intelligence.

In the partially redacted filing, PhosAgro alleged the U.S. Commerce Department used domestic sales instead of total sales when it eliminated intracompany sales during its calculation of a preliminary 20.9% tariff on the company's phosphate fertilizer shipments.

The department deviated from its own metrics when calculating the rate at which it believes the Russian government subsidizes its fertilizer industry, according to the filing. This was the figure used to set the tariff rate, so PhosAgro provided "corrections for a significant ministerial error" under the appropriate U.S. trade regulation, the filing stated.

The agency only included sales from PhosAgro subsidiary JSC Apatit when calculating the sales denominator used to set the tariff, ignoring exports to third-countries through an affiliated trading company in Switzerland, according to the filing. The company believes this ran counter to a prior statement by the department that it would use total sales when determining the subsidy available to PhosAgro and other fertilizer companies by their domestic government.

This resulted in an aggregate 2019 sales figure that "double-counts domestic sales in Russia," the filing stated. Daniel Cannistra, counsel for PhosAgro, told Market Intelligence in a Dec. 9 email that the company believes the tariff should be reduced to 10% from 20% in order to reflect the calculation change.

The Commerce Department is aware of the filing and is reviewing the allegations, a public affairs official said in a Dec. 9 email.

Commerce initiated the trade action following an investigation of complaints raised by Mosaic Co., a U.S.-based fertilizer company. As of late November, the department was expected to proceed with final determinations on tariff rates by Feb. 8, 2021.

The U.S. imported 767,288 tonnes of phosphate fertilizer from Russia in 2019 that was altogether valued at $299.4 million, according to the preliminary Commerce Department determination. So far, the potential for trade action has not calmed the nerves of U.S.-based fertilizer companies that believe low-cost supply from other jurisdictions will continue to flood the market.

The Apatit subsidiary, which operates the OJSC Apatit phosphate mine in northwestern Russia, was incorporated in 1929 as Trust Apatit to mine the Khibiny apatite-nepheline deposit.