TSXV:EPO.H - Post by User
Comment by
srpaton Sep 25, 2013 7:30am
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Post# 21765415
RE:RE:China acquired 12.5% stakes in Uralkali....read on....
RE:RE:China acquired 12.5% stakes in Uralkali....read on....
I took the China-Belarus deal as a purely defensive play. China buying insurance in a potash producer to protect themselves from long-term price increases. If the price of potash goes up, their holdings in Uralkali go up, offsetting the increase they are paying in their shipments of potash. China might secure potash supply with this deal, but the other 87.5% of shareholders certainly aren't going to sell for a loss just to make China happy.
And isn't the point of an offtake agreement not only to guarantee supply for a buyer, but to also guarantee a buyer for the producer? Who cares if Uralkali takes back some of the 15% of market share it lost to canpotex in the last year. If Encanto has a buyer lined up with a long-term offtake agreement, it doesn't really matter how much canpotex is selling.
srpat