IFFCO to set up joint venture co in Australia

New Delhi: In order to ensure assured raw material supply at a discount over market prices, IFFCO has finalised plans to set up a joint venture company in Australia for mining rock phosphate and supply it to its facilities in India.

The co-operative would set up the joint venture with Legend International Holdings Inc of Australia. It would mine rock phosphate at Lady Annie project in Queensland and would supply three million tonnes of rock phosphate to IFFCO annually.

The price at which the subsidiary would sell rock phosphate to IFFCO would be negotiated on a fair and equitable basis for both companies based on international market prices applicable for the Indian market with an appropriate discount.

Rock phosphate is the main raw material for phosphoric acid which in turn is the main raw material for the multinutrient fertiliser di-ammunium phosphate (DAP).

Phosphoric acid prices have increased by more than 250 per cent in the international market during the past one year. India imported phosphoric acid in 2007-08 at an average price of $566.25 a tonne for which the negotiated price for fiscal 2008-09 has gone up to $1,985 a tonne.

The Managing Director of IFFCO, Dr U.S. Awasthi, said that “India is currently facing shortage of phosphate fertiliser and prices have also gone up manifold in the last one year due to supply constraints and other factors like increased use of biofuels in different countries.”

“IFFCO always looks for opportunities to increase fertiliser availability and has inked the agreement with Legend with this objective,” he said.

The total project cost is around $800 million. The possible modes of financing and joint venture options for the capital cost are currently under discussion between IFFCO and Legend officials.