India offers $1bn incentive for African infrastructure investment
By: Ajoy K Das
12th June 2012
Updated 6 minutes ago
http://www.miningweekly.com/article/india-offers-1bn-incentive-for-african-infrastructure-investment-2012-06-12
KOLKATA (miningweekly.com) - The Indian government has set aside some $1-billion, offering fertiliser companies soft loans to create logistics and infrastructure facilities in African countries like Eritrea, Ethiopia, Congo and Ghana as a precursor to acquiring fertiliser mineral assets in these countries.
“It is necessary to deepen economic cooperation leading to convergence of economic needs of two countries before mineral asset acquisitions can be successfully negotiated,” a senior official in India’s Department of Chemicals and Fertiliser said.
India has identified the African countries for the acquisition of fertiliser mineral assets like potash and rock phosphate, however Indian fertiliser companies so far have been unsuccessful in concluding any overseas acquisition of raw material sources.
“It is very difficult to successfully gain access to overseas mineral assets particularly in Africa without long term bilateral economic engagements. The model adopted by China has been very successful where Chinese companies invest heavily in infrastructure and logistics before gaining concessions for minerals. India needs to adopt a similar approach,” the official said.
“The Indian government proposes to spend $1-billion between 2012/17 through government-owned fertiliser companies to establish sovereign commitments in the African countries. Subsequently, the corpus would be increased to fund mineral asset acquisitions,” he added.
Several Indian companies operate out of South Africa, Tunisia and Morocco but have not been able to extend their footprint into other countries owing to a lack of government support. The soft lines of credit would was expected to fulfill this gap, the official said.
According to the Fertiliser Department, Indian demand for fertiliser would rise 4% to 61.27-million ton during 2012/13 with urea consumption forecast at 32 m tonne, di-ammonium phosphate 13.24-million ton, potash 4.69-million ton and complex nutrients at 11.25-million ton. India was fully dependent on imports to meet domestic demand for phosphatic and potassic fertilisers and imports about 10-million tons a year of urea.
However, government officials pointed out that large state controlled companies like Rastriya Fertiliser and Chemicals or Indian Farmers’ Fertiliser Company were pure fertiliser producers with no experience in mining. At the same time, India did not have standalone mining companies of the likes of a Rio Tinto or BHP operating in a range of mineral assets.
As such, the fertiliser companies would be at a disadvantage in operating fertiliser mineral assets overseas or a coal or iron-ore Indian mining company operating a fertiliser raw material asset, the officials pointed out.
Any long-term bilateral economic engagement with African countries leading to fertiliser mineral asset acquisition would have to adopt a consortium approach comprising Indian fertiliser, mining and infrastructure companies. But such would require a very high degree of management efficiencies, officials acknowledged.
Received on Tue Jun 12 2012 - 10:46:33 EDT
