Investment

Hunt is on for domestic reserves of nutrient

By Wan Zhihong (China Daily)
Updated: 2010-10-08 08:03

Ministry to invest 100 million yuan a year to ensure potash supplies

BEIJING - The central government has started a nationwide potash exploration program to ensure a stable supply, as demand for the crop nutrient grows worldwide.

The program includes such measures as conducting exploration work and constructing a strategic supply base for the resource, Xinhua News Agency reported, citing sources from the China Geological Survey, an agency under the Ministry of Land and Resources.

The ministry has invested 50 million yuan ($7.35 million) in exploration this year and will add 100 million yuan a year between 2011 and 2015, the report said.

Analysts have said the move shows the country is taking a diversified approach to meet rising domestic demand. In addition to continuing its overseas purchases, it is paying more attention to domestic development, they said. However, some experts said the country's potash consumption will rely on imports in the long run, because its reserves are not abundant.

China's proven potash resources can only satisfy domestic consumption for 20 to 30 years. Most are in western regions, a China Geological Survey researcher, who declined to be named, said.

China is the world's second-biggest potash importer. The country's potash consumption will rise 4.5 percent to 7 million tons this year, Shanghai Potash Technology and Research Center's Director Wei Chengguang said.

BHP Billiton's $39 billion bid to take over Canada's Potash Corp of Saskatchewan, the world' largest fertilizer-maker, has captured global attention. Many industry insiders said the deal would have a major impact on China's agriculture, because prices would be monopolized.

China is paying close attention to the bid, because it is a concern for the country's and the global potash industries, Ministry of Commerce Spokesman Yao Jian said in September.

Sinochem Group, China's largest fertilizer trader, may struggle to receive State financial backing for a takeover of Potash Corp of Saskatchewan Inc, making a deal unlikely, Bloomberg reported on Thursday, without citing sources.

Lin Zichao, manager of Anhui Nongwang Agricultural Sci-technology and Development Co Ltd, a small chemical fertilizer factory, said small plants like his could not survive if potash fertilizer prices were dominated by foreign enterprises. "My company would surely be doomed if the monopolization really takes place," Lin said.

The government may consider subsidizing small fertilizer factories if the domestic market cannot determine the price issue, he added.

Chinese Academy of Engineering scholar Zheng Mianping said China should set its sights on potash resources in neighboring countries, such as Laos, Uzbekistan, Kazakhstan and eastern Russia's Siberia.

Gao Yuan contributed to this story.

China Daily

(China Daily 10/08/2010 page13)