Govt proposes to align avg sale price of rock phosphate with global rates

Facing a DAP shortage, the Centre plans to link rock phosphate prices to global rates to encourage domestic production and reduce dependence on imports from Jordan, Morocco, and others

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Amid a shortage of Di-Ammonia Phosphate (DAP), which is the second-largest-consumed fertiliser in the country, the Union mines ministry has proposed aligning the average sale price of domestically mined rock phosphate, a key ingredient in making DAP, with international rates to boost its production.

 

The proposal has been incorporated as part of a draft notification to amend the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016. The amendment will come into effect upon its publication in the official gazette.

 

Trade industry sources said at present, India hardly produces any rock phosphate of grades suitable for manufacturing of good quality DAP, but if domestic miners are incentivised adequately, they might look for the same within the country.

 

Presently, almost all the raw materials that go into making DAP — namely rock phosphate, phosphoric acid, and ammonia — are imported into India from countries like Jordan and Morocco. More than half of the country’s annual DAP requirement is imported in finished form. Annually, India consumes around 10-11 million tonnes (mt) of DAP.

 

Recently, finished DAP prices have reached almost their record levels of $1,000 per tonne at around $800 per tonne due to squeeze in supplies from China, and also disruption in supplies from West Asia because of the Iran-Israel conflict.

 

The high prices coupled with low opening stocks have meant that farmers across the country are facing an acute shortage of DAP at present, leading to long queues outside sale centres. 

 

Meanwhile, the draft notification said that the Indian Bureau of Mines (IBM) will use a three-part formula to determine the average sale price of rock phosphate. It will be calculated by multiplying the cost and freight (CFR) price of rock phosphate, as published by the Department of Fertilisers, with the monthly average exchange rate of the Reserve Bank of India (RBI). The result will then be adjusted with a grade-based conversion factor.

 

The draft amendment categorises rock phosphate into four grades based on the percentage of phosphorus pentoxide (P2O5) content. The highest conversion factor of 0.85 applies to phosphate with more than 30 per cent P2O5 while the lowest factor of 0.22 is for material with P2O5 of 20 per cent or less.

 

Globally, imported price of rock phosphate has been trading at around $175-180 per tonne.

 

Over the weekend, Saudi Arabia’s Maaden, one of the world's leading manufacturer of DAP, signed a long-term agreement with three Indian fertiliser companies — Indian Potash Limited (IPL), KRIBHCO, and Chambal Fertilisers (CIL) — for the supply of 3.1 mt of DAP annually for five years starting 2025-26 (FY26). The agreement also includes a provision for a five-year extension based on mutual consent.

 

In 2022, Coromandel International Ltd, India’s leading phosphatic fertiliser player, had acquired 45 per cent equity in Baobab Mining and Chemicals Corporation (BMCC), a rock phosphate mining company based in Senegal.