(Adds context, quotes, Belarus opposition leader)
By Andrius Sytas
VILNIUS, Jan 12 (Reuters) - Lithuania on Wednesday terminated a transport agreement between its railway and Belarus state-owned potash producer Belaruskali, saying the sanctions-hit country could not use Lithuania to export the crop nutrient, its main foreign currency earner.
Belaruskali, one of the world's largest producers, was sanctioned by the United States last August, one year after a crackdown following a disputed presidential election which President Alexander Lukashenko said he won.
Belarus potash continued to be transported through Lithuania however, as it was not included among European Union sanctions against Minsk. This caused a public outcry in Lithuania which is one of Europe's most vocal critics of human rights abuses in its neighbour and a U.S. ally.
The government said on Wednesday the 2018 agreement between the railway and Belaruskali goes against national security, which is legal grounds for its termination.
Transport minister Marius Skuodis told reporters, "this is just a first step towards stopping the potash transport".
The state could resort to reviewing any potash-related transport contract on national security grounds, he said.
Skuodis warned the potash could still be transported by other rail companies as it was not subject to EU sanctions. At least two non-state-owned railway companies could be looking into the business, he said.
"The authorities find it important to close the loopholes in the sanctions and seek a way to stop the transit", a spokesperson for Belarus opposition leader Sviatlana Tsikhanouskaya, in exile in Vilnius, said after a meeting on Wednesday with Lithuania's president.
The state-owned LTG railway company said it would refer any further requests to transport the Belarus potash to the government, to check their compliance with national security interests.
Belaruskali uses Lithuania's Klaipeda port to export potash.
The U.S. has since expanded its sanctions to the separately held Belaruskali's trading arm Belarus Potash Company (BPC), from April 1.
Prime Minister Ingrida Simonyte came under pressure to resign after Lithuania's potash transports continued beyond Dec. 8, when the U.S. sanctions came into full effect, but she announced last week she would stay in her post.
The head of Lithuanian Railways (LTG), Mantas Bartuska, agreed to step down to "de-escalate" the situation.
Prices of the fertiliser are set for an extended rally after the sanctions, piling more pressure on farmers and consumers already facing rocketing costs and a global economy navigating rising food inflation.
Norway's Yara, the single biggest Belaruskali buyer which purchased 10-15% of its output, said on Monday it will wind down purchases of potash from Belarus by April 1 as the sanctions made it impossible to continue the trade. (Reporting by Andrius Sytas in Vilnius, Editing by Louise Heavens, Alexandra Hudson)
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