(Repeats story released late Tuesday with no changes to text)
* Production targeted to start 2017
* Urea is most used fertilizer in India
* Stiff competition seen from Yara, Agrium
(Adds comments from IFFCO managing director)
By Rod Nickel
WINNIPEG, Manitoba, Oct 9 (Reuters) - The Indian Farmers
Fertiliser Co-operative (IFFCO), one of India's largest
fertilizer makers, plans to build a C$1.2 billion ($1.22
billion) nitrogen plant in Eastern Canada with a Canadian
partner to cash in on strong North American demand.
IFFCO and La Coop federee said on Tuesday they plan to begin
construction in the province of Quebec in two years, provided
they can raise the remaining 45 percent of the capital cost and
pending a feasibility study. They hope to start producing urea,
a nitrogen-based fertilizer for crops, in 2017.
The project is the latest in a series of announced plans for
additional nitrogen capacity in North America, as high crop
prices support demand and with new technology unlocking the key
ingredient natural gas from shale rock.
IFFCO and La Coop will face stiff competition from Norway's
Yara International ASA and Canada's Agrium Inc
, both of which plan to expand their nitrogen output.
In the near term, a surplus of nitrogen production is
unlikely, considering that the United States is a net importer
of the fertilizer, said Claude Lafleur, CEO of La Co-op, in an
"The (crop) production in North America is increasing also,
and corn needs a lot of nitrogen," Lafleur said. "At the end of
the day, if everybody goes and builds new facilities, it could
lead to a glut, but we don't see that in the next 10 years."
The U.S. imports more than two-thirds of its urea
production, but still, if all the rumored projects became
reality North America would quickly have a surplus, said David
Asbridge, president of NPK Fertilizer Advisory Services.
"Even if we have three, possibly four new plants in North
America in the next five years, that's going to be a little
price-depressing," Asbridge said.
But U.S. Awasthi, managing director of IFFCO, said the plant
will not compete in the same markets as Yara and Agrium, whose
plants are in Western Canada.
"Yara and Agrium don't have their plants here (in Quebec),"
he said. "I don't see any competition."
The presence of a strong local partner, in La Coop federee,
makes the IFFCO project a strong bet to proceed, Awasthi said.
IFFCO operates five fertilizer production plants in India
and holds interests in plants in Oman, Jordan and Senegal. It
chose the Becancour, Quebec site for its access to a port,
railway and pipeline for natural gas - which is a key input in
nitrogen production - IFFCO said.
Urea is the most widely used fertilizer in India, especially
for growing its rice, wheat, sugar cane and cotton. In 2011/12,
urea consumption in India stood at 29 million tonnes compared to
28.2 million tonnnes a year earlier. India imported 7.83 million
tonnes of urea in 2011/12 compared to 6.6 million the previous
IFFCO's priority will be to sell the urea first to Quebec
buyers, then the rest of North America and finally to India,
The plant would produce up to 1.2 million tonnes annually of
urea, to be split evenly between IFFCO and La Coop. IFFCO will
hold about one-quarter of the equity, with La Co-op holding 12
percent and the Quebec government investing 18 percent, Lafleur
The remaining 45 percent equity has yet to be raised, he
A group of farmers and other investors based in the western
province of Saskatchewan, called FNA Fertilizer Limited
Partnership, is also raising capital for a proposed nitrogen
La Coop federee, a agriculture-based, co-operative dating
back 90 years and based in Montreal, also has investments in
livestock production, meat processing and grain marketing. It
plans to sell its share of urea production from the plant to
farmers in Quebec and the northeastern United States through its
The partners plan to draw natural gas by established
pipeline from Western Canada to supply the plant. A Quebec site
still makes the most sense because IFFCO can easily export urea
via the St. Lawrence Seaway and La Coop can sell the fertilizer
to eastern farmers, Lafleur said.
(Reporting by Rod Nickel in Winnipeg, Manitoba; additional
reporting by Rajendra Jadhav in Mumbai; Editing by Andrew Hay
and Leslie Gevirtz)