New Delhi:: State-owned Rashtriya Chemicals and Fertilisers is conducting due diligence on a proposal to acquire a 25% stake in a rock phosphate mine owned by Russian fertiliser-maker Acron Group for $366 million.
“We have signed a confidentiality agreement with Acron Group to acquire 25% equity in the Oleniy Ruchey rock phosphate mine in Russia. Acron is asking $366 million for the stake. We are carrying out due diligence,” a top RCF official told PTI.
Acron had secured the rights to develop the mine through an auction and the license was issued in 2008. Rock phosphate is a key raw material in the manufacture of fertilisers like di-ammonium phosphate (DAP) and single super phosphate (SSP).
India imports over five million tonnes of rock phosphate every year, which accounts for over 90% of the country’s annual requirement.
The phosphate project, located some 500 miles away from St. Petersburg, holds around 62 million tonnes of reserves. Acron began development activities on the project in 2008 and expects production to commence in the first half 2012.
Acron has estimated the required investment under the first phase of the project at around $400 million, out of which $100 million has already been spent.
“We are currently carrying out due diligence. However, the price Acron has tagged for a 25% stake in the mine is a bit too high. After the due diligence, if we find it’s okay, we will proceed,” the official said.
“$366 million is a huge amount. We have to ensure the viability. As per the agreement, we will buy 50% of the offtake. What would be the price? If it is at the market rate, so what is our profit? We have to see many things,” the official said.