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The Economic Observer cited sources close to the deal as saying that, according to a preliminary assessment, Sinochem would need $40 billion to $60 billion to trump a $39 billion hostile offer by BHP Billiton (BHP.AX)(BLT.L) for Potash Corp.
The amount would be too much for Sinochem, which reported $25 billion in total assets at the end of 2009, the Beijing-based weekly newspaper cited analysts as saying.
In its application to the government, Sinochem argued that Beijing should back a bid for the Canadian firm because potash is key to China's national food security, the paper said.
The Economic Observer's story chimes with a report last Friday by the Globe and Mail in Toronto that Sinochem was trying to drum up support for a Chinese-led bid for Potash Corp.
Sinochem is the parent of China's largest fertilizer company, Sinofert (0297.HK).
Sources told Reuters last week that Sinochem Corp had invited Singaporean state investor Temasek Holdings TEM.UL to join a consortium exploring a bid for Potash Corp.
China, which typically buys about 7 percent of the output of Potash Corp, fears a BHP takeover might push up the cost of fertilizers that it will need to produce food for its huge population in coming years.
China's Ministry of Commerce said last week that it would pay close attention but that it had not received any material or information from a Chinese enterprise regarding the deal.
Reporting by Zhou Xin and Alan Wheatley, editing by Miral Fahmy