10 January 2013 12:39 [Source: ICIS news]
LONDON (ICIS)--India’s Gujarat State Fertilizers & Chemicals (GSFC) has secured a long-term supply of potash fertilizer by signing an agreement to invest up to $61m (€47m) in Canadian potash miner, Karnalyte Resources, which includes picking up a 19.98% stake in the junior developer, the companies said today.
State-owned GSFC will acquire a 19.98% stake in Karnalyte Resources for $46m, subject to regulatory approval. The investment also includes cost of financing the construction of Karnalyte's Wynyard Carnallite project, which is expected to resume production by 2015.
"Karnalyte is ahead of other junior potash mining companies in Canada in terms of expected commissioning of the project. For GSFC, an assured supply will help in expanding its portfolio of fertilizers,” said Atanu Chakraborty, Managing Director of GSFC.
As part of the deal, GSFC will receive 350,000 tonnes/year of potash initially, with the supply eventually increasing to 600,000/tonnes/year. The deal is signed for a period of 20 years from the commencement of commercial production.
Karnalyte Resources plans to operate a solution mining facility that will initially produce 625,000 tonnes of potash/year, increasing to 2.125m tonnes of potash/year over time.
Indian fertilizer producers such as GSFC, Indian Potash Ltd (IPL) and Rashtriya Chemicals and Fertilizers (RCF) have been in talks with Canadian potash companies in the past to ensure the long-term supply of potash, but this is the first major deal to be finalised.
There has also been talk in the last year that the Indian government will financially back the overseas investments through a sovereign fund as it looks to reduce its dependence on exports, although no such fund has been formed yet.
India is entirely dependent on imports to meet its needs for potash fertilizer. The country has delayed signing import contracts since March 2012 because of high global prices, but is expected to sign new agreements shortly as prices have eased over the last few months.
($1 = €0.77)
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