China National Complete Plant Import & Export Corp Ltd (Complant) and Canadian miner MagIndustries Corp have agreed to jointly build a potash fertilizer plant in the Republic of Congo, which may ease Chinese demand for the product.
China is the world largest potash fertilizer consumer with annual demand around 10 million tons. [Agencies]
According to a statement Complant filed with the Shenzhen Stock Exchange yesterday, the $1.2 billion plant will be constructed in two phases, with each phase providing production capacity of 600,000 tons.Complant will undertake the engineering, procurement and construction of the plant. It also promised to obtain financing from Chinese banks for the investment.
The plant will be located near the Atlantic port city of Pointe-Noire. The Mengo project will be part of a 135 square kilometers Mengo mining license owned by MagIndustries' mining division, MagMinerals Potash Corp. Other details like the timetable, shareholding percentages, product sales and profit sharing were not disclosed.
Potash is the common name for potassium carbonate and various mined and manufactured salts that contain the element potassium in water-soluble form.
According to a statement from MagIndustries released in January, 25 brine field production wells were completed and an 11.2 kilometers gas pipeline was installed in 2009, representing about half of the work required to support the operation of a 600,000 ton a year potash plant.
Complant shares gained 5.27 percent to 11.18 yuan yesterday in Shenzhen trading.
Lu Quanzhi, an analyst at South China Securities, said potash fertilizer prices in China would continue to fall in the coming months as inexpensive imports from Russia pour into the domestic market. "Falling prices will boost demand on the goods, it is the other side of the coin." said Lu.
Chinese importers and Russian fertilizer producer BPC, one of the world's largest potash fertilizer exporters, have agreed upon $350 a ton CFI (cost, freight and insurance) for 2010, compared with over $500 a ton in 2009.
Statistics from the General Administration of Customs of China showed the nation imported some 2 million tons of potash fertilizer in 2009, about 60 percent less than 2008 due to high prices.
China is the world's biggest consumer of potash fertilizer with annual demand around 10 million tons. However, domestic output is only 4 million tons a year, satisfying only one third of the national demand.
