Israel Chemicals Said Near to Accord With Allana on Potash Mine

Jan 23, 2014 4:41 pm ET

Jan. 24 (Bloomberg) -- Israel Chemicals Ltd., which harvests minerals from the Dead Sea to produce fertilizers, is nearing an agreement to help Canada’s Allana Potash Corp. develop a potash mine in Ethiopia, according to a person familiar with the talks.

The person asked not to be identified because the information isn’t public. The talks could still fall apart.

A tie-up may provide ICL with a new source of potash nearer to buyers in India and China just as a government-appointed panel is leading a review of Israel’s natural-resources royalties and taxes. Potash Corp. of Saskatchewan Inc., Canada’s largest potash producer, scrapped a proposed bid for ICL in April because of uncertainty surrounding Israeli policies.

“ICL has recently announced its new strategy and cited an intention to develop potash capacity beyond its current mines,” the Tel Aviv-based company said yesterday in an e-mailed response to questions. “ICL is discussing many opportunities and projects around the world.”

ICL also said its collaboration with other companies often begins with it providing technical assistance. The current potash market, in which prices have slumped in the past 12 months, is “challenging” for all potash mines that are being developed from scratch, it said.

The agreement would give Allana, with a market capitalization of C$120.3 million ($108.4 million) and no revenue, an experienced partner to help it develop its mine in Ethiopia’s northeastern Danakil Depression.

Richard Kelertas, a spokesman for Toronto-based Allana, declined to comment on ICL’s interest.

Allana’s proposed mine would flush water-soluble underground potash deposits with brine. The resulting liquid solution would be pumped to evaporation ponds on the surface. In May, the company said Ethiopia approved Allana’s environmental, social and health impact assessment for the project. A feasibility study was completed in February.

Allana climbed 3.5 percent to close at 45 cents yesterday in Toronto.

--Editors: Simon Casey, Steven Frank