RCFL eyes bigger stake in Canadian potash project
By: Ajoy K Das
5th October 2012
Updated 3 hours ago
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KOLKATA (miningweekly.com) - India’s Rashtriya Chemicals and Fertilizers (RCFL) was considering increasing its investments and taking majority control in the proposed joint venture (JV) with Canada’s Western Potash to develop the $2.8-billion Milestone potash project, in Saskatchewan.
“A higher investment could be put on the table by RCFL to become the favored and majority partner of Western Potash in the Milestone project since the Canadian potash company had other suitors,” an official in the Indian Department of Chemicals and Fertilizers said.
“RCFL, in ongoing talks with Western Potash, has committed an investment of $1-billion. But this would make RCFL the junior partner in the JV. Western Potash has shown a willingness to part with a higher equity stake to foreign investors, and RCFL would follow this up, aiming to conclude a deal before current year-end,” the official said.
Last month, the Indian government announced a policy directive for the adoption of public-private partnerships (PPPs) between it and private fertiliser companies, aimed towards more aggressive fertiliser mineral asset acquisition overseas.
In line with this, RCFL would explore the option of consortium investments with private Indian fertiliser producers, in the Milestone project.
RCFL, which is majority-owned by the Indian government and among the country’s largest soil nutrient and industrial chemical producer, aimed to establish long-term security in fertiliser imports through an investment in the Canadian project, with buy-back conditions.
India was fully import-dependent in pottasic fertiliser and imported 4.69-million tons a year of potash, accounting for around 50% of the global trade in potash.
The Indian government was also considering the possibility of funding the higher investments by RCFL by leveraging the resources of a proposed $1-billion sovereign wealth fund (SWF), to be created specifically for the acquisition of foreign fertiliser mineral assets through PPP initiatives.
However, officials in the Department of Chemicals and Fertilizers cautioned that an SWF was still only on the drawing board and investments in the Milestone project should not be delayed until the fund was made operational, since foreign asset acquisitions were competitive and several Indian companies had lost out in the past owing to tardy investment decision-making.
Edited by: Esmarie Swanepoel
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"Für die Aktionäre von Western Potash muss es eine Riesenenttäuschung sein, wenn Sie sich den Aktienchart anschauen. Noch im März notierte die Aktie nahe dem 52-Wochenhoch von 1,063 Euro und aktuell ist das Papier für rund 0,35 Euro zu haben. Dies ist ein Verlust von mehr als 67 Prozent.