Cash-strapped Belarus is negotiating the sale of its most prized asset, the potash producer Belaruskali, under the terms of a loan agreed this month with Russia, the Wall Street Journal reported Tuesday.

Responsible for one-third of the world's potash fertiliser production, Belaruskali could be worth $20 billion, the report said, citing people familiar with the negotiations.

Potential buyers include investors from China and Russia, whose billionaire owner of the Uralkali producer has already held talks with the Belarussian firm, the Wall Street Journal said.

Officials at the ex-Soviet Union's largest potash producer and Belneftekhim, the state corporation that holds its shares, declined to comment.

The importance of potash fertiliser has soared in recent years owing to mounting demand for food in the world, particularly China, with the market led by Potash Corp of Canada.

Uralkali's Russian owner Suleiman Kerimov is in the process of merging the country's two main potash suppliers, and his partial ownership of the Belarussian firm would secure his global lead in fertiliser production.

The Wall Street Journal, however, said Belarus has refused an initial offer from the Russian buyer, with little progress also reported on the sale of a 25-percent stake in Belaruskali to Chinese investors.

The talks were reported after Belarus agreed to privatise $7.5 billion worth of state assets within three years under the terms of a $3-billion bailout loan it received on Saturday from a group of ex-Soviet states led by Russia.

Russia has also confirmed interest in a 50-percent stake it does not yet own in the Belarussian natural gas transport operator, Beltransgaz.

Moscow had refused to issue the loan without the privatisation programme, which is aimed at reviving the country's Soviet-style economy and presents a chance for Russian investors to scoop up major Belarussian corporations.

President Alexander Lukashenko had resisted the sales but a 36 percent currency devaluation last month and a massive state hard currency shortage has forced the veteran leader to reach out for foreign help.

The country's gold and hard currency reserves shrank 28.6 percent since the start of the year to reach $3.59 billion on June 1, with only $1.32 billion of that held in cash, the state statistic agency reported on Tuesday.

Minsk last week also sought assistance from the International Monetary Fund, which has no existing programme with the Belarus, a country in international isolation due to a post-election crackdown on democracy protesters.

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