The head of Russia's largest potash producer Uralkali has been detained in Belarus, Russian news agencies reported on Monday, escalating friction between the two ex-Soviet neighbors after the collapse of a joint sales pact.
Vladislav Baumgertner, also a supervisory board member at the Belarus Potash Co (BPC), was held by the Belarusian Investigative Committee on suspicion of abusing his position and official powers, RIA Novosti news agency reported.
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Belarus, led by President Alexander Lukashenko since 1994, is a staunch Russian ally, but Uralkali's surprise decision to quit a joint trading venture with BPC in July strained relations between the two countries.
The dissolution of the cartel, which could cause the global potash price to plummet 25 percent in the second half of 2013, raised the prospect of aggressive competition in a market where a few powerful suppliers have long been able to command high prices for the soil nutrient.
Potash is a key foreign-currency earner for Belarus, which has kept in place a largely Soviet-style economy with full employment and price controls. A cheaper potash price could hit the value of Belarus's currency.
Last week, BPC displayed its hostility towards Uralkali's management as a result of the cartel decision, when it ruled out returning to a joint venture with Uralkali under the current ownership.
The Russian company declined immediate comment. Reuters could not reach the Belarus Investigative Committee, the country's top crime-fighting body, for immediate comment.
Shares in Uralkali eased 2.2 percent by 8:00 a.m. EDT, extending losses since before the cartel's collapse to 27 percent.
(Reporting by Andrei Makhovsky and Polina Devitt; Writing by Alessandra Prentice; Editing by Douglas Busvine)