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Belgian firm sells fertiliser to Iran as sanctions ease

Ron Bousso and Lin Noueihed
Thursday, 16 Jan 2014 | 10:43 AM ET

* Chemical firm wins 1st Iranian potash tender in two years

* Easing of sanctions on Iran's banking system paved way

LONDON, Jan 16 (Reuters) - Belgian chemical firm Tessenderlo will ship fertiliser to Iran within weeks as the easing of Western financial sanctions has helped Tehran complete its first potash tender purchase in two years.

Sanctions imposed by the United States and its allies over Iran's controversial nuclear programme did not ban the supplying of fertiliser to the Islamic Republic.

But measures that have isolated Tehran from most of the global banking system have significantly limited its trading, shipping and payments over the past two years.

Ties between Iran and the West took a turn for the better after the election of President Hassan Rouhani in August and culminated in a breakthrough deal in November.

Iran agreed to halt its most sensitive nuclear activity in exchange for the easing of sanctions on some sectors for an initial six months. The deal comes into effect on Monday.

Iran's state grains agency has already bought milling wheat since the agreement as it builds up reserves.

In September, Iran's Agricultural Support Services Company (ASSC) issued a tender to buy 60,000 tonnes of potassium sulphate, its first for two years, according to its website.

A Tessenderlo spokeswoman said the chemical producer won the tender and expected to deliver the first of two cargoes by the end of this month.

Unifert, a Lebanese fertiliser trading firm with offices in Europe, Iran and across the Arab world, is executing the physical and financial transactions, sources close to the deal said.

Though the tender was issued before the November political agreement, sources said that an improvement in ties after Rouhani's election in August had raised optimism.

The easing of restrictions on Iran's banking system will facilitate trade and encourage future transactions, they said.

"It is now easier and more workable on the banking side to seal deals now," a European trading source said.

The fertiliser was priced at around 350 euros ($480) a tonne, not including freight and insurance, market sources said, roughly in line with benchmark European prices.

"The tender was issued two or three months before the deal, so the demand was there anyway. However, the political environment makes it easier. It was the difficulties the Iranians had making transfers in hard currency that had restricted trade before," a source close to the deal said.

ASSC also in September issued a tender to buy 210,000 tonnes of granular triple super phosphate (GTSP), which was awarded to producers in Bulgaria and China, according to market sources.

Tessenderlo is one of the world's largest producers of SOP, which is mostly used to fertilise arid land and is an important nutrient for Iran's fruit and vegetable agriculture.

Unifert is one of the most prominent traders and distributors of fertiliser and seed and other agricultural supplies in the Middle East and North Africa region. ($1 = 0.7356 euros)

(editing by Jane Baird)