Coromandel Grows Single Super Phosphate Supply
India's Coromandel International (NSE:COROMANDEL
last week that it has signed a definitive agreement to buy a controlling stake in fertilizer maker Liberty Phosphate (BSE:
) and two of its affiliates.
The deal is valued at upwards of US$70 million (3.75 billion rupees) and will see Coromandel take a 56.28-percent stake in Liberty. With another offer for an additional 26 percent of Liberty still on the table, Coromandel will soon substantially boost its share of single super phosphate (SSP) production in India.
SSP is a cheaper alternative to the popular diammonium phosphate (DAP) and is obtained through a chemical reaction between rock phosphate and sulphuric acid, according to Reuters. It provides critical potassium nutrients to soils while also adding calcium and sulphur micronutrients at a relatively low price.With an installed SSP capacity of 960,000 tonnes spread across six plants, Liberty is one of the largest players in the country, a Business Standard article notes. Coromandel's acquisition will bump its own current SSP capacity up from 130,000 tonnes a year to 1.2 million, making it one of India's top SSP providers. SSP demand growth SSP demand in India has grown in recent years as the cost of its more expensive substitute, DAP, has risen. DAP prices have gained in recent years due to rising demand for phosphate products, which has put the product out of reach for many of India's food producers. The situation was exacerbated when the Indian government announced a 27.4-percent reduction in phosphate fertilizer price support for the 2012 to 2013 fiscal year in March of last year. India's modern nutrient-based subsidy policy for complex fertilizers was introduced in 1992 after the sector was "decontrolled" and witnessed rapidly expanding prices. Subsidies were extended to SSP in 1993, and a number of changes to the subsidy formula occurred along the way.
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