Melbourne: Mining and agriculture resource development company Legend International Holdings Inc., controlled by mining entrepreneur Joseph Gutnick and backed by Atticus Capital Holdings Llc., has agreed to sell fertilizer to India worth $1 billion (Rs4,060 crore) a year, shoring up supplies for the nation.
Mineral boost:A farmer strews fertilizer in his mustard field
Legend may supply at least 3 million tonnes (mt) of phosphate rock a year from its planned project in Australia to the Indian Farmers Fertiliser Cooperative Ltd (Iffco), Gutnick said. Legend and Iffco are also in talks to fund the development, estimated to cost $826.6 million, he said.
The project may tap rising demand for crop nutrients in developing countries as they lift food and fibre consumption. India’s fertilizer imports tripled in the four years to 31 March 2007, and China, which exports fertilizer to India, last month raised export taxes by almost 135% to meet domestic demand. The increases, which will boost the tariff range from 0-35% to 100-135%, will apply from 20 April to 30 September, the ministry of finance said last month
“The fact that we have an end buyer is half the battle, if not more than half the battle,” Gutnick, 55, said at the company’s Melbourne headquarters. “I’ve travelled to Asia to a number of countries, there is a shortage and there is a real need for fertilizers.”
Legend rose 82 cents, or 27%, to $3.92 in New York on 2 May in Over-the-Counter Bulletin Board trading. It has more than tripled this year.
Gutnick is the company’s largest shareholder with 47% of Legend stock. Atticus, a New York-based hedge fund, holds 12% of the company. Legend got the rights last year to the project from Queensland.
Demand in China, India
Food needs in China and India will boost sales of crop nutrients for years to come, Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer maker, said in February. South Asia, which includes India, Pakistan, Bangladesh and Sri Lanka, was the biggest importer of phosphate rock in 2006, according to the International Fertilizer Industry Association.
Iffco says it’s the country’s largest producer of fertilizer from its five plants as of 31 March 2007, according to its website. The New Delhi-based group has 50 million farmer members, Gutnick said.
Iffco may pay for some or all of the development cost in return for a stake in the plant or the company, he added.
The price Iffco will pay will be linked to international prices and is still being negotiated, Gutnick said. Based on Monday’s price the deal is worth about $1 billion, he said. Phosphate rock is used to make crop nutrients.
“We are assured of a good price in good times and bad,” Gutnick said. “It’s a significant step forward.”
The project will have an output of 5mt a year and includes a mine, a plant and pipeline to the port of Karumba in northern Queensland, for export. Production is scheduled to begin at the end of 2009, with a six-month contingency time frame, Gutnick said. He is “very confident” it will go ahead. Gutnick was once a prominent gold miner in Australia. He was the founder of Great Central Mines Ltd, previously the nation’s second largest gold company.