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| India should time its fertiliser imports: Mosaic CEO |
| Shaikh Zoaib Saleem / New Delhi Feb 13, 2012, 17:00 IST |
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 The import dependence of the fertiliser sector makes India vulnerable to various price risks. And the ballooning subsidy burden only makes matters worse. James T Prokopanko, chief executive officer of US-based Mosaic Company, a leading potash and phosphate player globally, tells Shaikh Zoaib Saleem that India should time its imports to get favourable prices.
What are your expansion plans in India and elsewhere?
The market is growing, so the demand for our product is bound to increase. We are willing to enhance our distribution network in India, and develop new micro-nutrient rich potash fertilisers specially designed for Indian soil and crops.
Mosaic is going to invest $5 billion to expand its potash capacities and has already invested $3 billion. We are going from the current 10 million tonnes to 15 million tonnes.
There have been reports that international potash producers will curtail production, ostensibly to increase prices...
Right now, there is no scarcity of potash, the scarcity is of customers for potash. We produce to match demand. From the beginning of December, the demand has dropped sharply. China and India did not have any contracts coming up. In North America, dealers stopped buying due to the Euro zone crisis. There is a lot of caution and we have been shipping very little and taking very few orders. We have curtailed phosphate for the same reason. In 2008, when prices crashed, we lost a lot of money. This is a low season compounded by economic worry, so people say wait.
Aren't high international prices are impacting consumption?
These prices are very normal and are not historically high with respect to grain prices. Relatively, they are very affordable. We have to make good profits for the years when prices drop. Also, the industry has to invest in expansion. Moreover, it takes over seven years after investment to get the first dollar from a mine.
India is hugely dependent on imports. Do you wish to have any long-term contract with India?
The question is well justified from Indian point of view. We used to have one-year contracts earlier. Now we have six-month contracts for potash. We have some three-year contracts for phosphate. So things are moving to a stable supply steadily. Twenty per cent of our production goes to India alone. So we are quite dependent on India and vice versa. Also, we like to have India as a customer as it is a secure customer. India is a preferred customer and gets discounts compared to others.
You say India gets discounts over others, but last year China got a better price than India...
India gets discount at any particular time. China agreed to contact Potash in January. India did not agree till June in 2011. Then the world prices changed. China picked the right time and so got the lower price. India cannot come back and say that we want the January price. The best time to buy is when no one else is buying.
Potash suppliers have been criticised for cartelisation...
It only appears to be cartelisation. There are a plenty of suppliers for potash. If someone does not like our prices, he can go to others for sure. What you call cartelisation, is actually a low-cost and efficient method to selling Canadian potash to the world. It would be very difficult if each company decided to do all its shipping operations on its own.
How does Indian fertiliser sector reflect in your global experience?
With the government issues, subsidies and many other things involved, the role the Indain fertiliser sector has played in enhancing foodgrain production has been commendable. We have expanded our many capacities based on the demands from India. But India needs to improve the balance of nitrogen, potash and phosphate. Also, this is the system that works for India.
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