September 4, 2012
Rashtriya Chemicals and Fertilisers plans US$1 billion investment in Canada
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India''s biggest urea manufacturer, Rashtriya Chemicals and Fertilisers (RCF) is considering an investment near US$1 billion in Canada to ensure supply of its raw material.
"We are keen to pick up potassium assets in Canada where the government had indicated that it will support us," said R G Rajan, chairman and managing director, RCF.
He said the company has already initiated the process for issue of notice inviting tenders and will soon appoint a consultant to advise it on this.
According to industry experts, potassium, or muriate of potash (MOP), is the third most used fertiliser in India and is largely imported.
Urea accounts for roughly half of the 55 million tonne per annum (mtpa) fertiliser market in India.
The other half is dominated by potassium, phosphorus and sulphur-based fertilisers - diammonium phosphate, or DAP, alone commands over 20% market share.
MOP, with total consumption at six mtpa, accounts for just over a 10% of the market.
"Potassium is very expensive and we are keen to acquire a huge asset in partnership with the government," said C M T Britto, director - technical, RCF.
He said while the asset size could be as huge as US$2 billion, the company will chip in with a 50% interest.
RCF is primarily a urea manufacturer, though it also has sales of bought-out fertilisers like DAP, MOP and single super phosphate (SSP), along with imported urea, which amounted to sales of 14.11 lakh tonne last fiscal, out of the total fertiliser sales of 40.80 lakh tonne.
Rajan said the company is also nearing a deal with Republic of Togo in West Africa for picking up stake in a rock phosphate mine. This will help the company in the manufacture of DAP, phosphoric acid and SSP in the near future.
"We have visited the country and met with its president recently, and a deal is expected in due course," said Rajan. Analysts feel the developments are positive for the company, though there are questions over the pricing of such assets.
"MOP and DAP are the fastest-growing fertilisers in the country with an approximate growth rate of 13% and 10%, respectively," said a senior analyst with a domestic brokerage.
However, there are no deposits of either rock phosphate or potassium in the country, so they have to be imported in large quantities, he pointed out. "In that respect, it is beneficial for RCF as it can not only use it internally but can also sell it to its peers."