China has launched a search for domestic sources oOn Friday October 8, 2010, 12:11 am EDT
BEIJING (AP) -- China has launched asearch for domestic sources of potash to ensure stable supplies of themineral used in fertilizer, a state news agency said Friday, amidofficial concern about mining giant BHP's bid to acquire a majorCanadian producer.
China is a major potash importer and says a BHPBilliton Ltd. takeover of Canada's Potash Corp. could boost prices andhurt Chinese farmers. A state company reportedly is considering apossible competing bid to BHP's $39 billion offer but Canadian officialsare wary of allowing Chinese ownership.
The Ministry of Land andResources has spent 50 million yuan ($7 million) this year looking forpotash in China and plans to spend 100 million yuan annually through2015, Xinhua said, citing ministry sources.
The communistgovernment sees food supplies and farming as a matter of nationalsecurity and is uneasy about the prospect of BHP, already a key iron oresource for China's steel mills, expanding its role in supplyingmaterials needed by Chinese industry.
China's potash consumptionis forecast to rise 4.5 percent to 7 million tons this year, Xinhuasaid, citing the director of the Shanghai Potash Technology and ResearchCenter.
Potash sources found so far in China can meet its needs for 20 to 30 years, the report said, citing the China Geological Survey.
Beijinghas warned of a potential "potash monopoly" if BHP succeeds inacquiring Potash Corp. of Saskatchewan. But industry analysts say therestill are enough other sources that such a change is unlikely to affectprices.
Potash has called BHP's bid too low and says it is talking with other parties.
AChinese business magazine said last month a state-owned chemicalcompany has asked for Cabinet permission to make a bid for Potash but noChinese bidder has made a formal offer.