* India's GSFC to buy 20 pct stake, assures potash supplies
* Saskatchewan mine would compete against Potash Corp
By Rod Nickel
Jan 10 Tiny Canadian mining company Karnalyte
Resources has landed a small, but strategic investment
from India, pushing i t s planned potash mine closer to direct
competition with the world's dominant sellers of the crop
Gujarat State Fertilizers & Chemicals Limited, an
Indian farm business that makes fertilizer and industrial
products, will buy a nearly 20 percent stake in Karnalyte for
C$45 million ($45.5 million), or C$8.15 per share. The deal,
announced by the companies early on Thursday, is a premium of
less than 2 percent over the last traded price for Karnalyte on
Tuesday before trading halted the following day, but a 20
percent premium to the volume-weighted average price for the 20
trading days that ended Dec. 20.
The stock has risen sharply in recent days.
GSFC also agreed to buy 350,000 tonnes of potash per year
for 20 years, or more than half of the output from the first
phase of Karnalyte's planned potash mine near Wynyard,
Saskatchewan. The off-take agreement increases to 600,000 tonnes
per year once phase 2 is built.
"At present, India is fully dependent on imports of potash,"
Atanu Chakraborty, managing director of GSFC, said in a
statement. "This is a significant partnership by an Indian
fertilizer manufacturing company with a potash mining company
abroad to procure high quality potash for the Indian market."
The mine would be small compared with those operated in the
resource-rich province by giant fertilizer companies Potash
Corporation of Saskatchewan Inc, Mosaic Co and
Agrium Inc. If built, it would be the first in the
province with such significant influence by investors from China
or India, the world's two biggest consumers of the nutrient used
to boost crop yields.
Fertilizer makers in those countries import much of their
supplies from Canpotex Ltd, the offshore marketing arm for
Potash, Mosaic and Agrium, or BPC, which performs the same role
for Russia's Uralkali OAO and Belaruskali of Belarus.
Karnalyte would likely operate outside of Canpotex, as will
mines under construction in Saskatchewan by Germany's K+S AG
and Anglo-Australian miner BHP Billiton Ltd
Karnalyte's mine would cost C$600 million in the first phase
and produce 625,000 tonnes of the crop nutrient per year.