Western Potash in talks with India's Rashtriya - report

Western Potash Corp. (TSE:WPX)(FSE:AHE) said on Wednesday that it was talking about a joint venture with India’s Rashtriya Chemicals and Fertilizers among others, Reuters reported.

The junior potash company plans to build the Milestone mine southeast of Regina, Saskatchewan by 2016 and eventually produce 2.8 million tonnes of potash, a key soil nutrient for growing crops.

"We have talked to and are talking to (Rashtriya)," said John Costigan, vice-president of corporate development for Western Potash told the news service. 

"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 includeKarnalyte Resources (TSE:KRN) and Encanto Potash Corp. (CVE:EPO).

Western POtash 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 that the state-run company is considering a possible $1 billion investment in Canadian potash mines to secure long-term supplies.

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 number two buyer of potash, and its major suppliers include Potash Corporation of Saskatchewan (TSE:POT),Mosaic Co. (NYSE:MOS), and Agrium (TSE:AGU)(NYSE:AGU). The country meets its entire potash requirement through imports.

The world’s two biggest mining companies, BHP Billiton (LON:BHP) and Vale, 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 Potash recently submitted an environmental impact statement to the Saskatchewan government about the Milestone project.

Following a technical review by regulatory agencies, the report will be available for public review and will be available on the company's website - expected sometime in the fourth quarter. 

The report was submitted to the Saskatchewan Ministry of Environment for the project, which is located 30 kilometres southeast of Regina and 80 kilometres from Mosaic's Belle Plaine mining lease. 

The environmental report details features designed to minimize the potential impacts of the project to the environment, while "optimizing social and economic benefits" to the local and regional communities.

Once up and running, Western Potash said the Milestone project will draw between 40 per cent and 70 per cent of the City of Regina‘s wastewater. The agreement, if paid out annually, is worth more than $200 million to the city over a 45 year term.

Under NI 43-101 guidelines, the Milestone project holds 66.6 million tonnes of measured recoverable resource, 186.9 million tonnes of indicated recoverable resource and 708.2 million tonnes of inferred recoverable resource.