Uralkali prefers annual supply deals with India

Written by Indu Bhan | Indu Bhan | Moscow | Updated: Sep 28 2011, 06:39am hrs
Uralkali, a leading global producer of potash, has said it would prefer annual fertiliser supply contracts with Indian importers, while sticking to contracts of less than a year with Chinese consumers as the Indian market holds more promise to the Russian fertiliser giant.

Vladislav Baumgertner, CEO, Uralkali, told visiting mediaperson that India continues to be the most active market for global potash suppliers. The demand for potash in India is seen growing at 5-7% annually, above the global growth rate of 3-3.5% a year, he said . India is entirely dependent on imports to meet the demand of around 6 million tonne.

We would prefer supplying on an annual contract basis to India, while it would be semi-annual or quarterly pricing in the case of China, Baumgertner said. India is soon set to displace China in benchmarking international potash prices. India consumes a lot of potash and this makes sense for us to have Indian market as benchmark for potash prices, he added.

Uralkali, which became the worlds number two potash producer by capacity after the buy of local rival Silvinit in June has posted a net profit of $794 million in first-half of this year.

While contemplating a new 2.5 mt greenfield mine by 2018 at an investment of around $2.5 billion, the Russian major aims to produce 10.8 mt of potash this year and is eyeing a total sales of 11.5 mt. The situation on the potash market during the first-half of 2011 and its development in the second-half gives us confidence to believe that the upward trend will continue in 2012, he added.

Besides, Uralkali also intends to modernise its assets to raise annual capacity by about to 2 to 13 mt in 2012.

Uralkali claims its basic production cost, at $61 a tonne, to be half that of the world's biggest company Canadas Potash Corporation of Saskatchewan. It is because all our mines are in the same area, which gives us economies of scale.

(Travel for the visit was sponsored by Uralkali)