By Rajendra Jadhav
MUMBAI (Reuters) - India, one of the world's biggest consumers of fertilisers, is eyeing several phosphate projects in Russia to secure supplies, two senior industry officials said on Monday.
India is the world's top importer of the crop nutrient diammonium phosphate (DAP) and accounts for nearly half of annual global shipments of around 16 million tonnes.
Russian fertiliser maker Acron
"We are planning to secure phosphate supplies from Russia on a long-term basis," said an official with a state-run fertiliser company, who visited Russia last month with other Indian fertiliser company officials to evaluate mines in the north of the country.
The officials asked not to be identified because the discussions are not finalised.
"There are two options. One is to import raw material and process it in India. The other is to process raw material in Russia itself and bring finished products like DAP to India."
Both officials said the governments of India and Russia might announce a broad plan regarding these projects, while details would be crafted in the coming months by the companies.
Acron, one of Europe's top 10 fertiliser makers, declined comment.
DAP is the most widely used phosphate fertiliser in the world. Phosphate-based fertilisers are most commonly used along with nitrogen and potash-based fertilisers.
Logistics are the biggest hurdle to potential investment as the blocks offered by Acron and other Russian companies are based in the north, making it difficult to bring the material to India, the official added.
India usually imports more than 7 million tonnes of phosphate-based fertiliser each year, consisting mainly of DAP. The landed cost of DAP in India has fallen to $390 per tonne on a cost-and-freight (CFR) basis, from $520 per tonne in May due to weaker demand.
"Considering rising food demand, we need to secure phosphate, so we won't be hurt whenever there would be a fluctuation in prices. Right now we are highly dependent on imports," the official added.
High valuations of new projects at a time when DAP prices are low are also an obstacle to investment in Russia. To share the risks, India may set up a consortium of three to four companies, mainly state-run, and then collectively form a joint company with a Russian counterpart, he said.
Another Indian industry official, who every year leads negotiations with overseas potash and phosphate suppliers, said that no fertiliser company is currently in a position to invest in any large project.
"All companies are facing a liquidity crunch due to a delay in subsidy disbursement from the government. Borrowing from banks is also not easy as interest rates are very high," the official said.
If the government provides some support to the state-run fertiliser companies, then they can move ahead and commit some investment, he added. (Reporting by Rajendra Jadhav in Mumbai; Additional reporting by Victoria Andreeva and Polina Devitt in Moscow; Writing by Polina Devitt, editing by David Evans)
