March 15, 2010
PhosAgro signs US$1.5 billion fertiliser deal with India
PhosAgro, Russia's largest producer of phosphate-based fertilisers has agreed on a US$1.5 billion three-year supply deal with India to compete with North American producers.
PhosAgro signed the agreement with the Indian Farmers Fertiliser Cooperative and Indian Potash, India's biggest importers, during Prime Minister Vladimir Putin's visit, PhosAgro said in a statement. It plans to supply 20% of the 6.6 million tonnes of diammonium phosphate, or DAP, that India needs to import each year.
"The contract is three years long and based on a price formula," PhosAgro chief executive Maxim Volkov said, declining to give further details of the pricing. "Such a long contract is a precedent in the industry. It should help PhosAgro retain market share in India."
India will spend about US$11 billion on fertiliser subsidies in fiscal 2011, Finance Minister Pranab Mukherjee said February 26.
DAP, which improves the acidity of soil, gained to as high as US$1,300 a tonne in 2008, then plummeted to below US$300 a tonne and is now rising back, said Marina Alexeyenkova, an analyst at Renaissance Capital. "The parties want to hedge themselves from the volatility of the DAP market," she said.