Zuari joint venture buys 30% of Peru miner

Fertiliser maker Zuari Industries said on Friday its joint venture with Mitsubishi Corp has bought a 30% stake in Peruvian miner Fosfatos del Pacifico (Fospac) for $46.12 million.

The deal will give Zuari a secure and cost-effective supply of rock phosphate, a key raw material used to make diammonium phosphate, the second most-consumed soil nutrient in India after nitrogenous urea.

The stake will be bought through MCA Phosphates Pte Ltd, a Singapore company formed by Zuari and Mitsubishi Corp

Zuari has invested $20 million for a 30% stake in the joint venture, it said on Tuesday. Mitsubishi holds the rest.

Fospac, which has rock phosphate reserves of about 540 million tonnes, is expected to have an initial production capacity of 2.5 million tonnes, Zuari said.

Zuari has rights to export up to 50% of annual production of rock phosphate produced from the project, it said.

Zuari and other Indian fertiliser makers import most of their phosphate from Russia and the Middle East.

Import prices of DAP, which were about $500 per tonne in the fiscal year ended in March, shot up as much as $700 per tonne on the global market in August and have been hovering around $680 since then.

Indian farms consumed about 7 million tonnes of DAP in fiscal 2011, but consumption is expected to fall in the current fiscal year because of delayed imports and higher prices.

Shares in Zuari Industries closed at Rs455.30 on Friday, up 1.63%.