Uneasy pricing truce between Omnia and Foskor


Uneasy pricing truce between Omnia and Foskor

Published Date: 2017-12-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

Uneasy pricing truce between Omnia and Foskor

The fertilizer group accuses Foskor of continuing to flout Competition Ruling on pricing for phosphoric acid

Omnia and Foskor have agreed to continue their business arrangement pending resolution of a disagreement between the two companies over Foskor's pricing of phosphoric acid. Omnia agreed to withdraw an urgent High Court application last week after Foskor said it would continue supplying Omnia at a price higher than the international price. Omnia will pay it under protest, reserving its rights while securing supply for the local 2017/2018 planing season.

The two companies have been at loggerheads since 2014 when Foskor set its domestic phosphoric acid price at a level higher than the Free On Board Richards Bay (international) price. That was despite a 2010 Competition Tribunal Order forbidding it from doing so. Foskor's appeal against the price ceiling was dismissed with costs by the North Gauteng High Court last month and it failed to appeal the ruling within the 30-day timeframe. Foskor had previously said it wouldn't supply Omnia if it paid the price under protest. It is also reported to have refused to supply other fertilizer and animal feed producers unless they agree to its terms.

Related article: Omnia sells less fertilizer after bumper maize harvest

Omnia Fertilizer sources all its phosphoric acid from Foskor and says that company, through its position as the sole producer in the region, as well as having sole access to the import/export terminal at Richards Bay, has continued to flout the Competition Ruling on pricing. Omnia has claimed a substantial refund from Foskor for the additional amount it has had to pay. Apart from the legal bill it's had to foot, Omnia says its financial results for the year to March 2017 exclude a contingent asset of about R300 million, which represents the estimated amount recoverable from Foskor at the time.

Omnia's shares closed 0.3% firmer at R142.46 on Friday.

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