IFFCO buys stake in GrowMax for potash project

Last Updated: Thu, Feb 11, 2010 23:50 hrs

IFFCO has acquired a stake in a Canadian potash explorer and plans to continue scouring the globe for other low-cost potash projects, the head of the world's largest fertilizer co-operative said on Thursday.

IFFCO, or the Indian Farmers Fertiliser Co-operative has acquired a 10 percent stake in Calgary, Alberta-based Americas Petrogas, along with a 20 percent stake in its subsidiary GrowMax Agri Corp, which owns a potash brine project currently being developed in Peru.

"This should be an extraordinarily unique potash project, involving relatively low risk and low capital expenditures," said IFFCO Managing Director U.S. Awasthi.

India relies completely on imports to meet its potash needs and the country was hurt when the price of the crop nutrient spiked to record levels in mid-2008.

"We want to have some kind of security over raw material requirements," said Awasthi. "After this deal, we will keep looking for projects that can come into production quickly."

This deal is the latest sign of the growing importance of the global fertilizer business, which has seen a spate of merger and acquisition activity in recent months.

GrowMax's Bayovar potash project is adjacent to Brazilian mining giant Vale's huge phosphate development in Peru -- the project is also located near a deep sea port.

Bayovar is scheduled to begin production in 2012 with an initial output of 250,000 tonnes of potash annually at a cost of $125 million.

GrowMax plans to ramp-up annual production at the site to about 1 million tonnes over a five to six year period, Awasthi told Reuters.

Although details on an off-take agreement are yet to be finalized, IFFCO plans to buy 50 percent of annual potash output from the site.

IFFCO is one of India's top fertilizer manufacturers and it owns a 34 percent stake in Indian Potash Ltd, the country's largest potash importer.

IFFCO was formed in 1967 to produce fertilizer for the co-op sector in India. It currently produces more than 7 million tonnes of annually and has ties with 40,000 co-operative societies all across India.

Its assets are worth more than $10 billion and include manufacturing sites spread across the country, along with a series of joint ventures and investments overseas.

(Reporting by Euan Rocha; editing by Rob Wilson)

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