Gujarat State Fertilizers & Chemicals Ltd (GSFC) is planning to take management control of Canadian potash miner, Karnalyte Resources Inc, by acquiring additional 15-20 per cent stake in the Toronto Stock Exchange-listed company.
GSFC had acquired 19.98 per cent stake in Karnalyte (Wynyard Carnallite Project) for Canadian $ 45 million (approx Rs 250 crore) in 2013. This helped the Gujarat state PSU to secure good quality supply of potash from Canada.
"An individual investor named Robin L Phinney holds 15 per cent stake in the company but he is willing to join GSFC. So after acquisition of additional 15-20 per cent stake, our combined holding will be beyond 51 per cent and we will take management control of Karnalyte. All the necessary clearances and approvals from the authorities have been obtained, including environment clearances," said S K Nanda, Chairman and Managing Director, GSFC Ltd.
GSFC will invest additional around Rs 150 crore for the acquisition. The company has appointed SBI Caps as its banker to arrange loans, while Export Development Canada (EDC), a Canadian government credit agency, will also support financial assistance. It will take about eight years for GSFC to start repayment of debts after it starts production from the mines.
"Karnalyte's mines are spread across 40,000 hectare of area located in the Saskatchewan province. There are not much employment opportunity for natives in that region. This project will generate a lot of employment. Hence, the Canadian government is ready to support state-run firm, GSFC," Nanda said.
Potash consumption
India's potash consumption of about 5-6 lakh tonnes per annum is highly dependent on imports, as the potash produced from mines in Udaipur, Rajasthan is of poor quality.
"Canadian potash is of high quality. This acquisition will ensure secured supply of good quality potash for Indian consumers. We will also look for opportunity to export potash from Canada to other countries as well," Nanda said.
Initially, 6 lakh tonnes of potash would be mined in the first year, of which GSFC will procure about 1.5 lakh tonnes and import to India at Sikka port in Gujarat.
At present, Europe and Canada enjoy good potash reserves. "Going forward, we expect more demand for potash in the Asian market. This strategic acquisition will help us cater to that demand," he added.