NEW DELHI — PhosAgro, Russia's largest producer of phosphate-based fertilizers, said Friday that it agreed on a $1.5 billion three-year supply deal with India to compete with North American producers.
PhosAgro signed the agreement with the Indian Farmers Fertiliser Cooperative and Indian Potash, India's biggest importers, during Prime Minister Vladimir Putin's visit, PhosAgro said in a statement. It plans to supply 20 percent of the 6.6 million tons of diammonium phosphate, or DAP, that India needs to import each year.
"The contract is three years long and based on a price formula," PhosAgro chief executive Maxim Volkov said by phone from India, declining to give further details of the pricing. "Such a long contract is a precedent in the industry. It should help PhosAgro retain market share in India."
India will spend about $11 billion on fertilizer subsidies in fiscal 2011, Finance Minister Pranab Mukherjee said Feb. 26.
DAP, which improves the acidity of soil, gained to as high as $1,300 a ton in 2008, then plummeted to below $300 a ton and is now rising back, said Marina Alexeyenkova, an analyst at Renaissance Capital. "The parties want to hedge themselves from the volatility of the DAP market," she said.
PhosAgro declined to disclose the volume it will supply or price per ton. DPA prices vary from $310 a ton in Jordan to $550 a ton in Pakistan, according to Bloomberg data.
The company is controlled by billionaire Senator Andrei Guryev, who bought it from former Yukos chief Mikhail Khodorkovsky. PhosAgro had 95 billion rubles ($3.2 billion) of revenue in 2008, according to company data.