Lithuanian PM has doubts over Lifosa future

  • 2022-03-15
  • BNS/TBT Staff

VILNIUS - Lithuanian Prime Minister Ingrida Simonyte has doubts over the Kedainiai-based phosphate fertilizer producer Lifosa's prospects to continue operating as the company is facing problems not only due to the existing sanctions imposed on its owner, but also due to the supply of Russian raw materials.

"As far as I know, there are not only issues related to the shareholder (Russian oligarch Melnichenko - BNS), who is on the list of sanctioned persons, but also to raw materials. It is wrong to believe that if the state nationalizes a company, it will somehow have other conditions to operate, especially if the source of its raw materials is in the Russian Federation," she told journalists at the Seimas on Tuesday. "It is an interesting proposal, but I will certainly not comment on it further."

In 2020, Lifosa bought raw materials from Russia's phosphate mining company Kovdorskiy GOK, NAK Azot, a producer of ammonium, nitrogen and mineral fertilizers, chemical product producer Novomoskovskiy Khlor, as well as Switzerland's EuroChem Trading. Another company linked to Lifosa's shareholder. The total value of procurements from the Russian companies exceeded 45 million euros, and Lifosa paid 6.9 million euros to the Swiss company.

Earlier in the day, Solidarumas, a Lithuanian trade union, suggested nationalizing Lifosa, saying that the move would help to save jobs and state and municipal budget revenue and that part of the company's profits could be used to support Ukraine.

The union is also asking the authorities to allow using Lifosa's currently frozen bank accounts to pay employees and suppliers so that the company can continue to operate. 

Lifosa's accounts were frozen last Thursday after Russian oligarch Andrey Melnichenko, its indirect owner, was placed on the EU sanction list. 

Lifosa said in Monday it was unable to it meet its obligations and had turned to state authorities for help. 

Rimantas Proscevicius, the company's CEO, said state support was "vital" for continuing the plant's operations. 

The company in Kedainiai, in central Lithuania, employs more than 1,000 people. 

Two Lifosa trade unions on Monday appealed to several ministries and parliamentary committees for help.

The Lithuanian company is 100 percent owned by Swiss-registered Eurochem Group, in which AIM Capital, a Cyprus-registered firm of Melnichenko, holds a 90 percent stake.

EuroChem Group said on March 10 that Melnichenko had resigned from its board of directors as of March 9, and that he was no longer the group's main beneficiary.