InterviewIFA ’12: Allana Potash open to Indian, Chinese partners - CEO

23 May 2012 07:21  [Source: ICIS news]

By Deepika Thapliyal

DOHA, Qatar (ICIS)--Canada’s Allana Potash is in talks with several industry players for a strategic or investment partnership, the company’s top executive said late on Tuesday.

India and China are the world’s major potash importers, and players in these countries are among those interested in picking up a stake in the company, Allana Potash president and CEO Farhad Abasov told ICIS at the International Fertilizer Industry Association (IFA) conference.

“Both countries need to focus on high-growth areas like Ethiopia. We are open to the Indians or the Chinese,” Abasov said.

India Potash Ltd (IPL) is believed to have been in talks with Allana for a 5-10% stake, according to media reports.

Allana is likely to make a final decision in December – around the same time that a feasibility study on its Danakhil potash project in Ethiopia is completed, he said.

The company has hired a merchant banker to advice it on a deal with potential partners.

Allana is keen on partnering with existing potash players, but is also considering taking in investments from companies that are not in the potash business, Abasov said.

“A possibility is that we may have two partners, one on the off-take side and one strategic,” Abasov said.

The company’s major potash project is in Ethiopia, where it hopes to produce over 1m tonnes of standard grade muriate of potash, and also plans to manufacture sulphate of potas. It targets to begin production by 2014.

Allana has also received acquisition interests but is not keen on taking the merger and acquisition route yet, Abasov said.

Last month, Allana reported a 90% increase in the measured and indicated mineral resource estimate at its Danakhil potash project to 1.30bn tonnes.

The World Bank’s investment arm – the International Finance Corp (IFC) – owns a 4% stake in Allana, while private equity firm Liberty Metals and Mining Holdings has a 16% stake in the firm.

The potash sector is seeing significant interest because new companies need funds to finance their exploration plans.

Yara International has recently increased its holding in another Ethiopia-based potash explorer Ethiopotash BV to 51% from 16.67%. Ethiopotash is developing a potash resource in the Danakil basin, adjacent to Allana Potash's project.

Potash players that are in the market include Saskatchewan’s Western Potash, which has seen interest from western countries as well as India and China. Other companies include Karnalyte Resources and Encanto Potash Corp.

The IFA conference runs from 20-23 May.

By: Deepika Thapliyal
+44 208 652 3214

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