IFA '12: Indian firms delay purchasing stake in Canadian potash

24 May 2012 09:52  [Source: ICIS news]

DOHA (ICIS)--Indian potash fertilizer companies are in no rush to pick up a stake in new Canadian players, due to concerns it is too early to determine the long-term viability of the projects, an official from a major Indian importer told ICIS late on Wednesday.

Speaking from the sidelines of the International Fertilizer Association (IFA) conference, the official said: “What will be the product mix for the company? There is not clarity yet on that [product mix]. Is the management in for the long term or are they just interested to sell out at an early stage. These are our concerns.”

Indian companies have held discussions with new players in the potash sector – such as Allana Potash, Karnalyte Resources, Western Potash and Encanto Potash Corp – to pick up a 5–10% stake in these firms, several sources confirmed.

Indian fertilizer producer IPL was in talks with Allana Potash for a possible stake purchase, while Karnalyte Resources is believed to have held discussions with Gujarat State Fertilizers. The Canadian companies are likely to conclude their feasibility studies by the end of the year, and have been in talks with Indian, Chinese and Western investors for fundraising.

“We are looking at long term investments only, and right now we are not convinced about the long-term viability of these projects for us,” the Indian importer source added.

India is trying to secure assured supplies of potash, since the country is entirely dependent on imports to meet its needs. Last year the nation imported 6m tonnes of potash. Contracts for the current fiscal year 2012–2013 have not been signed yet because of a deadlock between global suppliers and Indian importers over prices.

The country has been scouting for a possible stake purchase or a long-term supply contract from overseas potash producers for years, but its efforts have met with little success.

The Indian government had been in talks with Belarus in 2011 to buy a 20% stake in potash producer Belaruskali. However, differences over the valuation of the deal stalled negotiations. The Belarusian government valued the company at over $30bn (€24bn), which the Indian government was not ready to pay.

It is not yet clear what the next course of action will be for Indian companies. For now, the nation will continue to be dependent on imports to meet its potash fertilizer requirements – at least for the next few years.

The IFA conference ran from 20–23 May in Doha, Qatar.

By: Deepika Thapliyal
+44 208 652 3214

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