India to open up potash mining for private miners

KOLKATA (miningweekly.com) – The government of the central Indian state of Rajasthan has taken a policy decision to open up potash mining to private miners through the auction of reserves.

Currently, India is entirely import dependent for its domestic potash requirements with local fertiliser producers shipping in an average of three- to five-million tons a year, even though the central state of Rajasthan has proven potash deposit reserves of an estimated 2.4-billion tons across the state.

The Rajasthan government, after years of dilly-dallying, has come around to opening up potash mining for domestic and overseas miners on expectations that private investments would be the fastest route to developing domestic potash mining capacities and reducing the country’s import dependency.

The state government has set up an “empowered committee” to lay down the roadmap for the development of domestic potash mining, with the country’s entire reserves concentrated around a single geography of western Rajasthan.

The decision to set up a committee followed a meeting last month of the state government with fertiliser producing companies, Central Institute of Mining and Fuel Research, Rajasthan State Mining and Mineral Corporation (RSMML) and Mineral Exploration Corporation Limited (MECL).

It was also decided at the meeting that the first step would be to finalise an agreement between RSMML and MECL within the next few months, which would undertake detailed geological studies and set up pilot mining projects, following which the potash blocks would be auctioned to private miners, government officials said.

Building up domestic potash production is crucial for India’s fertiliser and farm sector security particularly in view of rising global potash prices and a surge in the import bill in the wake of the weakening Indian currency.

According to industry estimates, potash prices over the past year increased from Rs12 000 ($169) a ton to Rs19 000 ($268) a ton. As a result, domestic prices of fertilisers like diammonium phosphate have surged 8% to 10% since early this year, while muriate of potash is up 8% and nitrogenous, phosphorous and potash fertiliser by 7%.