Western Potash, a junior mining company looking for outside capital to help build a potash mine in Western Canada, said Wednesday that it was talking about a joint venture with India’s Rashtriya Chemicals and Fertilizers, among others.
Western Potash plans to build its Milestone mine, southeast of Regina, by 2016 and eventually produce 2.8 million tonnes of potash for fertilizer markets.
"We have talked to and are talking to (Rashtriya)," said John Costigan, vice-president of corporate development for Vancouver-based Western Potash. "I would say right now they’re one of numerous players. These big companies move very slowly, and we’re proceeding cautiously too.
"We don’t want to get in bed with the wrong player."
Costigan said he thinks Rashtriya is also talking to other junior potash miners in Saskatchewan, which include Karnalyte Resources and Encanto Potash.
Western hopes to strike a deal with an investor on buying a stake in the company or taking it over by the end of 2012, with a feasibility study on Milestone due in late November.
Rashtriya’s chairman, R.G. Rajan, told Reuters on Friday that the state-run company is considering a possible $1 billion investment in Canadian potash mines to secure long-term supply of the nutrient.
That level of investment could make it a junior partner in Western’s project, which is estimated to cost $2.5 billion.
India is the world’s No. 2 buyer of potash, and its major suppliers including PotashCorp, Mosaic and Agrium. The country meets its entire potash requirement through imports.
The world’s two biggest mining companies, BHP Billiton and Vale SA, recently delayed decisions on building their own potash mines in Saskatchewan, which is home to more than 40 per cent of the world’s potash reserves.
Western also said Wednesday that it had submitted an environmental impact statement to the Saskatchewan government about the Milestone project.
Shares of Western Potash were up one cent at 65 cents in Toronto around midday.
— Rod Nickel writes for Reuters from Winnipeg.