Indian bank deposit rates.
Has anybody considered the facts that Encanto's rate of return could actually be close to 10% or less?
Why would an Indian company invest any cash in EPO at that rate when they can get an equal or better, and way safer, interest rate at the bank?
If Epo has similar costs to the K&S Legacy project, it would work out at $4.5 Billion to buy and build it. Then factor in that interest costs have to be added for the build period and then the ramp up to full production, it could easily have a total cost of $5.5 -$6 Billion.
Any Indian company would have a better and way safer return by just leaving their money on deposit in the bank.
Does that not make anybody stop and think.
Check out the interest rates banks pay in India on this attached link.
Why on earth would any company commit Billions of dollars when they can get the same or better rates risk free?
I understand all about security of supply, but with a falling potash price and BHP and K&S coming on stream, plus IMHO Karnalyte, that is an additional 13 million tons of potash just from Saskatchewan. Why would anyone take a risk with Billions of dollars when 13 m tons is coming on stream that is outside of Canpotex.
Now add in all the increased capacity that mosaic and Potash have built out and I just can't see anyone stepping up to the plate for Epo or Wpx.
A falling potash price enviorment coupled with increased global capacity = security of supply IMHO.