New Delhi: India is sending two officials to Belarus to negotiate with the government over the possible purchase of a stake in state-owned potash maker JSC Belaruskali.
Fertilizer secretary Sutanu Behuria and Sanjay Singh, secretary (east) in the external affairs ministry, are expected to begin talks on 26 August. The two are also expected to visit Moscow after that to hold talks with the Russian government.
“The discussions with the Russians would be on the possibility of joint ventures in the fertilizer sector between the two countries,” a government official said on condition of anonymity.
The decision to formally open negotiations with Belarus follows a 10 August meeting chaired by Prime Minister Manmohan Singh that was called at the behest of agriculture minister Sharad Pawar. It was decided then to set up a committee of secretaries (CoS) that would examine the possibility of acquiring mining and energy assets abroad.
The first meeting of CoS on Wednesday was chaired by cabinet secretary Ajit Kumar Seth and was attended by several secretaries of various departments, including fertilizers, petroleum, mines, external affairs and economic affairs.
Mint reported India’s interest in a 20-25% stake in Belaruskali, one of the biggest producers of potash in the world, on 10 August. Based on the Belarus government’s valuation of $30 billion (Rs 1.37 trillion), a 20-25% stake in the firm would cost $6-7 billion.
Russia’s largest bank OAO Sberbank on 5 August said it had acquired a 35% stake in Belaruskali as collateral for a $2 billion loan it had extended to Belarus along with Deutsche Bank AG.
An industry executive, speaking on condition of anonymity, said India could use the same method to acquire shares in Belaruskali as collateral. “Frankly, the Belarussians need money, and this company is their cash cow. So they may not sell stakes. But if India could loan them money in lieu of shares and an assured offtake agreement, they might strike a deal,” this executive said.
India needs to ensure long-term supplies of fertilizer to cope with increasing demand, but could face competition for the Belarus firm stake from rivals in Russia and China.
Agriculture minister Pawar had pressed the case for acquiring stakes in fertilizer companies abroad in order to “secure steady supplies of fertilizers at reasonable prices” in a 1 August letter addressed to the Prime Minister, which Mint has reviewed.
Pawar said India needs to explore prospects for partnerships and acquisitions of key potash sources in the world. “A suggestion has been made to take proactive steps for acquiring such mines/companies through a consortium of Indian companies with government support,” the letter had said.
Domestic demand for muriate of potash is about 5 million tonnes (mt), all of which is imported. According to the fertilizer ministry’s figures, India is likely to import 2.1-2.2 mt of the commodity this year, less than half the projected demand.