Mumbai: Indian companies are taking steps towards producing potash domestically, but it is most likely to remain the world’s top importer of the fertilizer for some time to come.
India imports and consumes around 5 million tonnes a year of the fertilizer, which has hit global headlines recently with Australian miner BHP Billiton’s $39 billion bid for the world’s biggest fertilizer maker Potash Corp.
Potash use by India’s agriculture sector is increasing.
Neighbouring China, the world’s largest consumer of potash, is producing more and more of the nutrient at home and now Indian companies are taking steps in the same direction.
But projects being considered by Rashtriya Chemicals and Fertilizers (RCF), NMDC, Tata Chemicals and a few other smaller units are only at preliminary stages and will take a few years to become commercial, analysts said.
For the next four to five years at least, matching India’s import needs would be impossible for domestic players, said Sageraj Bariya, analyst with Angel Broking.
“The efforts being taken are far from commercial production and meeting the country’s potash requirements domestically sounds difficult even after these projects turn operational,” he said.
India expects to import 4.7 million tonnes of potash, at $370 per tonne, in the current financial year, Udai Shanker Awasthi, managing director of Indian Farmers Fertiliser Co-operative Ltd, or IFFCO, had told Reuters in May.
For state-run RCF, the focus is firmly on potash potential.
“We are giving priority to the potash exploration project in the state of Rajasthan being done with NMDC and a small fertilizer firm,” J. Kohareswaran, chairman and managing director of RCF, told Reuters by telephone.
In June, his predecessor at RCF, U.S. Jha, had said if exploration was successful, it might take about three years for the project to become operational.
But analysts say the project is unlikely to make a substantial contribution to India’s potash demand.
The quantity and quality of potash that could be produced from Rajasthan is neither suitable nor significant, according to Tarun Surana, analyst at Sunidhi Securities & Finance.
“Potash is a natural resource and is readily available only in eight or nine countries globally,” he added.
“The RCF project is going on very slowly and ... significant production of potash from this project sounds tough.”
Tata Chemicals and Chennai-based Archean group’s unit Industrial Chemicals and Fertilizers are also working on projects to manufacture potash compounds using a concentrated form of sea water called ‘sea-brine’.
The Archean group’s plant will be built in Gujarat state over the next 24 months and will have annual capacity of 100,000 tonnes of potassium sulphate, the other key compound of potash.
“Once the plant gets ready, it will improve the availability of the soil nutrient in the country,” said Sethuram C.G., executive director at Archean group’s unit Industrial Chemicals and Fertilizers.
He added, he did not expect much impact on pricing but foreign exchange losses could be avoided.
“We would be substituting the imported nutrient by the domestic and hence, heavy forex losses could be prevented,” he said.
Tata Chemicals is working on a project to make potassium chloride in the state of Gujarat, an official who did not wish to be named told Reuters.