A Canadian answer to India’s food crisis

By Jagdeesh Mann
Mata Press Service 
 
The large screen TV burst into life in the boardroom of Western Potash Corporation high above Vancouver’s business district as a group of executives huddled to talk about their upcoming trip to India.
All the major networks were showing throngs of angry protestors marching through the streets of Delhi chanting slogans against high food costs.
“India has been struggling with rising food inflation, which hit nearly 20 percent late last year,” intoned a media commentator adding, “The country’s poor have been especially affected and food has become a national security issue for India.”
“There is no easy solution to this,” an Indian minister said when asked to comment on the ongoing anger over the high food prices in a nation with a supercharged economy experiencing unprecedented growth.
For Patricio Varas, the CEO of Western Potash, the solution to India’s food crisis is neither easy nor short term. However, there is a Canadian-made answer, which Varas and his team are taking to India this week.
Much of the on-going food crisis in India is blamed on the lack of fertilizer to boost yields of rice, fruit and vegetables and ensure supply at lower prices to the poor as proposed in India’s National Food Security Act.
The world’s second-most populous nation with over 600 million farmers is the biggest potash importer and it needs this oft-taken for granted mineral, which is the key component in fertilizer, in continued, abundant and stable supply.
India, which buys its entire potash requirement from overseas, will use 4.6 million metric tonnes of the soil nutrient in the year ending March 31, 2011 and it will require potash and rock phosphate in higher quantities as it aims to achieve food security, industry analysts said.
And this is where the Varas and his Vancouver-based Western Potash Corporation comes in.
“Fertilizers are key to India’s economy, because nearly 60 percent of the population is dependent on farming as a livelihood,” said Varas.
“India cannot afford to be entirely reliant on the increasingly high prices it has to pay to Canada’s major potash producers, who operate much like OPEC with their stranglehold on supplies,” he said. “It would be of huge strategic value for India to have some direct or indirect ownership of  strategic Canadian potash assets.”
Siddharth Rajeev, a Vancouver-based analyst, who has been watching Western Potash advancements over the last two years, described the company has having a unique property that will help India’s demands and keep food prices down in the long term.
“The initial study shows great potential and there are not many projects like this out there,” said Rajeev, who places Western Potash in the top three companies of the 150 corporations he analyses for investors.
Western Potash’s proposed mine in Milestone, 35 kilometres southeast of Regina, Saskatchewan has the potential to produce at least two and a half million tonnes of potash per year for at least 40 years, said Rajeev.
The company has the mineral lease rights on roughly 87,500 acres (35,400 hectares) close to existing solution mines that tap into the province’s more southerly band of mineral deposits. Solution mining involves pumping water into the mineral deposits, dissolving them for extraction. It is less costly and faster to get going than conventional mining.
Outside of the trio of multi-billion dollar potash miners that control Canada’s potash marketing cartel, Western Potash is the only other Canadian player that benefits from a sizeable, independently-verified potash deposit. It sits alongside other deposits in Saskatchewan which could supply world demand at current levels for several hundred years.
“What we will be looking for are long term strategic players in India for this tier-one project,” said Varas, who will be in India next week with a delegation from Saskatchewan’s Trade and Export Partnership (STEP)
“There is great potential for potash and companies like Western Potash in India which is looking for sources of steady supply,” said Brad Michnik, Executive Director of STEP.

The potash picture

• 75% of the world potash reserves are in Canada
• 30% of the world potash production that comes from Saskatchewan
• $3.1 billion worth of potash is sold by Saskatchewan anually
• 12  countries produce potash
• 160 countries consume potash
• 23.1 million tonnes of potash is consumed annually in Asia
• 3.1 million tonnes of potash is produced in Asia ever year.

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