A First Nations group in Saskatchewan is in talks to sell potash to the Indian government, a move that would help vault the aboriginal group into the fertilizer industry and transform its economy.
The Muskowekwan First Nation sits on 25,000 hectares of land in the southeastern part of Saskatchewan where big North American fertilizer producers Potash Corp. of Saskatchewan Inc. and Mosaic Co. are already operating mines.
Owning the land could make it easier for the First Nation group to build the mine and give the aboriginal group an advantage over other entrepreneurs hoping to get into the fertilizer business as demand increases from growing economies in Asia.
"It's not easy to find a project with one land owner," said Reginald Bellerose, the chief for the Muskowekwan First Nation.
But the group has some big hurdles to clear before the mine would become a reality. One is finding financing for the $3-billion project.
The Muskowekwan First Nation, like other aboriginal communities in the country, is plagued by a lack of investor confidence and is trying to alleviate fears of lawlessness, Mr. Bellerose said.
"Investor confidence is already fragile on reserves because of the unknowns, the political instability," Mr. Bellerose said. "So we've got to communicate that it is not a free-for-all on First Nations."
The fate of big projects – such as Enbridge Inc.'s proposal to build a pipeline to transport oil sands bitumen from Alberta to the West Coast, as well as plans by Noront Resources Ltd. and Cliffs Natural Resources to develop the Ring of Fire mineral deposit in Northern Ontario – is up in the air as companies, First Nations and the provincial governments negotiate terms.
Mr. Bellerose started discussions with the government of India about a year ago, the first step in its process to persuade Bay Street, Wall Street and other financiers to help the First Nation group.
He said the mine is projected to produce about 2.8 million tonnes of potash a year over the course of 70 years. That is similar in size to mines owned by Potash Corp. and Mosaic.
A mine that big would be a boon for the Muskowekwan First Nation, which has seen most of its population of 1,700 leave to find work.
"If we can get a long-term customer, that would be the ticket to building," said Mr. Bellerose, who has hosted two Chinese delegations and dozens of analysts in an attempt to entice a buyer.
Mr. Bellerose said he had been discussing a potash price between $340 (U.S.) a tonne and $640 a tonne with India, but that target has changed since Russia's OAO Uralkali broke up the Russian-Belarussian potash cartel in July and sent prices of the crop nutrient tumbling.
Potash, a critical ingredient used to grow crops, is not traded on public markets. Before Uralkali ended its partnership with rival Belarus's Belaruskali, the Russian-Belarussian group and its North American counterpart, Canpotex, controlled 70 per cent of the potash sold.