India not making headway with potash buys abroad

The Business Standard reports a senior official from India’s state department of fertilizers says so far the country’s effort to secure potash imports at a better price by aiding Indian companies to acquire assets abroad has not made any breakthrough.

The global potash market is controlled by about 10 mainly Canadian companies and a couple of Russian producers. With no local producers, India imports more than 6 million tonnes of muriate of potash a year for its 50 million small-scale farmers. Current pricing is around the $500/tonne level and Scotiabank recently said demand is weakening and after two years of steady price hikes 2012 will see no growth.

Prices ran up from $100/tonne in 2004 to almost $900/tonne in the run up to the 2008 recession when the boom went bust and prices rapidly fell back to $350/tonne.

In August, a delegation led by then Indian fertiliser secretary Sutanu Behuria travelled to Belarus to explore opportunities of investing in the potash industry  in the east European country, by buying a stake  in JSC Belaruskali, which together with Canadian and Russian potash players control almost 60% of world production. India was offered a 20% stake at $6 billion but came back empty handed.

Business Standard quotes U S Awasthi, managing director of Iffco, a major food company: “No private player can invest so much. The government has to step in or they should give us a sovereign loan at a very low interest rate, as it would be a long gestation project.”

MINING.com reported in September a US federal appeals court threw out an antitrust class-action lawsuit accusing seven companies of engaging in a global conspiracy to raise the price of potash since 2003 on the grounds that it could not rule on the alleged wrongful conduct on markets in India, China and Brazil.