Canada to sell potash to China for 2.2 billion dollars
Ottawa (AFP) Oct 20, 2010
Canadian fertilizer cartel Canpotex on Wednesday announced a deal to supply China's Sinofert with 3.15 million tonnes of potash over three years, for an estimated 2.2 billion US dollars.
Sinofert said in regulatory filings in Hong Kong that it would pay no more than 600, 730 and 870 million US dollars for the potash in each of the three years, respectively.
The actual price to be paid for the fertilizer ingredient, however, is to be negotiated every six months, Canpotex added.
The deal allows China to increase its consumption and guarantees that Canpotex supplies at least one-third of all seaborne potash imports to China in each year.
"We are very pleased with this development," Canpotex chief executive Steve Dechka said in a statement.
The agreement "reflects our continued joint commitment to the Chinese market where the pursuit of self-sufficiency in food production remains a priority," he said.
It also "demonstrates our confidence in Sinofert as our long-term business partner in this critically important overseas market."
Sinofert, a subsidiary of Sinochem, is China's largest integrated agricultural company.
Canpotex is the offshore marketing arm of Saskatchewan potash producers Agrium, Mosaic Canada Crop Nutrition and Potash Corp -- which is the target of a hostile takeover bid by Australian mining giant BHP Billiton.
A consortium led by the Chinese company had considered mounting a rival offer for Potash Corp but backed off.
China, a major importer of potash, which is used to make fertilizer, has been uneasy about the BHP bid as it already buys large quantities of the company's iron ore.
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