India looks to acquire 20%-25% interest in state-owned potash producer Belaruskali in deal with estimated valued of US$6B-US$7B to secure long-term source of fertilizer as demand grows; India likely to face competition from China, Russia

LOS ANGELES , August 11, 2011 () – India is looking to buy a 20%-25% stake in state-owned potash producer Belaruskali in a deal that could be valued at US$6-$7 billion, livemint.com reported Aug. 10.

Indian Prime Minister Manmohan Singh is holding a meeting Aug. 10 to discuss the potential acquisition, Mint reported, citing two senior fertilizer ministry officials. The government of Belarus, which is struggling with a severe deficit crisis, has valued Belaruskali at $30 billion, the officials added.

India’s aim is to have a guaranteed long-term supply of fertilizer at affordable prices as demand grows, but the country is likely to face competition from buyers in both China and Russia, Mint reported.

India must consider partnerships with and acquisitions of major potash producers via a consortium of Indian companies supported by the government, Sharad Pawar, India’s agriculture minister, said in an Aug. 1 letter to the prime minister.

Belarusian Prime Minister Mikhail Myasnikovich had a meeting Aug. 4 with Manoj Kumar Bharti, India’s ambassador to Belarus, to review the proposal.

OAO Sberbank, the largest bank in Russia, announced Aug. 5 that it acquired a 35% in Belaruskali as collateral for an outstanding $2 billion loan. Russia’s Uralkali OAO and China’s China BlueChemical Ltd. and Sinofert Holding Ltd. are also competing for a stake in Belaruskali, according to Sanjay Jain, director of New Delhi-based investment firm Taj Capital Partners Pvt. Ltd.

The need for grains, fruits, vegetables, oilseeds, millets and other crops is growing steadily, according to Pawar, and in turn, the need for fertilizers continues to grow and must be satisfied through imports or production.

India relies entirely on imports for muriate of potash. Currently, demand in India for MoP is around 5 million tonnes, Mint reported. In 2011, the country is forecast to import only 2.1-2.2 million tonnes of MoP, less than 50% of demand, because of the cartelization of international suppliers, according to Pawar. Cartelization has been a result of the uneven distribution of high quality phosphate and potash sources globally, and has caused India’s fertilizer subsidy spending to reach 1 trillion rupees ($22 billion) in 2008-09.

The primary source of this article is livemint.com, New Delhi, India, Aug. 10, 2011.

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