Chinese investment firm Beijing Tairui Innovation Capital Management Ltd agreed to invest C$80 million to acquire a strategic 51 percent stake in junior Canadian potash miner Western Potash Corp earlier this month, making its way into the global potash market.

Under the terms of the deal, Beijing Tairui will acquire 249 million common shares of Western Potash for C$0.3213 per share and has the right to appoint four nominees to the board of directors of the company.

The transaction is expected to close by the end of August 2015 subject to customary closing conditions including the approval of the Toronto Stock Exchange (TSX).

Benefits of the deal for Western Potash include the fact that the transaction will give it enough cash to fully finance its Saskatchewan-based Milestone potash project through to construction.

Beijing Tairui is a private equity firm with its focus on the energy and mining industries.

Vancouver-based Western Potash is an exploration and development stage company with properties in Canada and Brazil. Its main asset is the potash mine named Milestone Property located in southern Saskatchewan, where it boasts more than 50 percent of the world's potash reserves.

Potash is a form of potassium used as a fertilizer to strengthen plant roots and boost drought resistance. It plays a central role in helping feed the world's growing population, especially in Asian countries like China and India.

Western Potash has already received the environmental approval for the Milestone project from the provincial government.

According to analysts, Western Potash is the wild card in potash space, which the Chinese would like to keep up their sleeve, especially in negotiating potash prices with Western producers.

Prior to the investment, in April the company closed what it called a strategic equity investment by China Blue Chemical Ltd and Guoxin International Investment Corporation.

As a result of this transaction CBC (Canada) Holding will hold a 19.9 percent ownership stake in the company on a non-diluted basis.

China has been expanding its influence over the global potash industry. In April the Industrial Commercial Bank of China (ICBC) and China Construction Bank extended a $530 million loan deal to Russian potash miner Uralkali, the world's biggest producer of the commodity. In 2013, China’s sovereign-wealth fund (CIC) grabbed a 12.5 percent stake in Uralkali.

China’s strong agricultural demand and insufficient self-supply on potash will push the country to continue to import and invest in the potash industry worldwide. China imports 7 million tones potash every year and the annual growth will remain 5 percent.

wangru@chinadaily.com.cn