Indian companies in talks to buy stake in Canadian potash firms
2 min read . Updated: 08 May 2012, 10:46 PM IST
PremiumBy Reuters
Indian companies in talks to buy stake in Canadian potash firms
New Delhi: The Indian government plans to help local companies buy as much as 10% in Canadian potash firms to secure supplies of the key fertilizer after failing to buy a stake in Belarus government-owned potash producer JSC Belaruskali.
A delegation of Indian government officials and fertilizer industry executives visited Canada in April, where several companies, operating mostly in the country’s Saskatchewan province, had made presentations on their financials.
The fertilizer ministry official, who declined to be identified, said that these companies included Karnalyte Resources Inc., Western Potash Corp., Allana Potash Corp. and Encanto Potash Corp.
P.S. Gahlaut, managing director of Indian Potash, said his company was in talks with Allana Potash.
“We are certainly talking to them, and are confident of striking a deal. The government is playing a facilitator," Gahlaut said, adding that Indian companies were looking at buying between 5% and 10% in Canadian potash companies.
In addition to this, Gujarat State Fertilizers is in talks with Karnalyte Resources.
V.V. Vachhrajani, company secretary and deputy general manager legal and industrial relations at Gujarat State Fertilizers, declined to comment on whether the company was in talks with Karnalyte Resources. He, however said, in response to an email query, that the company was not represented in the delegation that went to Canada in April. Karnalyte Resources didn’t respond to emails seeking comment. Emails sent to Western Potash and Encanto, too, did not elicit a response.
For several years now, India has been trying to secure assured supplies of potash and the country has been trying to scout for a possible stake purchase or a long-term supply contract from overseas potash producers. Indian companies typically import the mineral from Russia, Belarus and Canada. Availability of cheap shale gas off the Canadian coast makes it economically viable to drill potash from underground reserves, Gahlaut said.
“Shale gas price in Canada is as low as $2 per mmBtu (million British thermal units), so projects can become economically viable," he said.
Last year, India had been in talks with Belarus for buying a 20% stake in Belaruskali, one of the world’s largest potash suppliers, for $6 billion. Mint had first reported this in August last year. Officials now say that despite several rounds of talks, the negotiations have gone nowhere.
India was being approached by foreign potash firms for stake purchases from companies from Canada, Belarus, Russia and Germany, Mint reported on 7 November.
Officials and industry executives, however, say none of these proposals have gone far.
At an annual import of about 5-6 million tonnes (mt), India is the single largest potash importer and controls nearly half the total world potash trade of 10 mt. Only 5% of the country’s potash consumption is met locally, making the country almost entirely dependent on imports.
aman.m@livemint.com
