Gandhinagar, 12 January 2013

In the valedictory speech at the Vibrant Gujarat Summit 2013 at Mahatma Mandir in Gandhinagar, Gujarat Chief Minister Shri Narendra Modi announced a Memorandum of Understanding signed to set up an industry in Canada.

Shri Modi said, “We have signed MoU with Canada, and for the first time our Gujarat’s one company will go to Canada as multinational and will start an industry. This company will go to Canada, will meet the government there and will set up a factory of Potash. And all this hard work will be for supply of Potash to our farmers here.”

Shri Modi made this announcement in presence of Canadian minister.

Shri Modi also talked about need to set up value edition facilities in Gujarat on a massive scale to support the cotton farmers whose surplus produce of cotton is not allowed to be exported by the central government.

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PTI reported that Gujarat State Fertilizers and Chemicals will invest up to INR 333 crore to acquire nearly 20% stake in Canada based Karnalyte Resources.

The acquisition price also includes cost of financing the construction of Karnalyte’s potash mining project.

With this deal, GSFC has also secured an assured long term supply of potash to India, which imports almost its entire domestic requirement of about 5 million tonne to 6 million tonnes.

GSFC said that the company has executed definitive agreements and committed a strategic investment up to CAD 60 million in Karnalyte Resources Inc in Canada to secure long term supply of potash.

According to Karnalyte, GSFC will make an investment of Canadian dollar CAD 45 million to acquire 19.98% stake in the company.

Karnalyte Resources in a statement said that “GSFC will subscribe for 19.98% of the issued and outstanding common shares after giving effect to this transaction at a price of CAD 8.15 per common share in a non brokered private placement for total gross proceeds of approximately CAD 45 million”

As per the off take agreement, GSFC will purchase 0.35 million per year of potash from Phase 1 of Karnalyte’s Wynyard Carnallite Project.

It said that the Indian fertilizer major will have to buy 0.6 million tonne per year of potash after completion of phase two of the project for 20 years on a take or pay basis.

GSFC will appoint one nominee to the board of directors of Karnalyte.

It added that “In addition, GSFC retains the right to maintain its equity position in future equity offerings and has agreed to commit approximately CAD 15 million in the next rounds of public equity financing by Karnalyte to finance the construction of Phase 1 of the Project.”