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Phosphate: Mosaic in Talks to Buy Mexican Firm

June 15, 2010

“Mosaic Co. is in talks to acquire Mexican fertilizer company Grupo Fertinal SA in a deal that could be worth up to $1 billion, people familiar with the matter said. A deal for Grupo Fertinal, one of Latin America’s leading fertilizer makers, would give the publicly traded Mosaic its first footprint in Mexico.

It is unclear if and when a deal could be completed but the parties have been in talks for about six months, the people familiar with the matter said. While Mosaic is seen as the most likely buyer, the people cautioned that the deal may still fall apart. An acquisition of the Mexican fertilizer company would expand Mosaic’s access to the phosphate rock it needs for making fertilizer in North America.

Mosaic, which owns extensive phosphate rock deposits in Florida, produces about 10% of the world’s potash fertilizer and controls 13% of the world’s capacity to make phosphate fertilizer.”

Source: Wall Street Journal, June 15 2010

Observations:

  • Mosaic has over $2 bln in cash. The company wants to use the money to increase access to phosphate deposits.
  • Grupo Fertinal owns a phosphate mine and processing plant in San Juan (Baja California).

Implications:

  • Vale might emerge as a competing bidder for Fertinal. The Brazilians want to expand in the fertilizer business. However, they don’t have a strong foothold in Mexico yet.
  • Mosaic recently announced investments in Peru, indicating the US company wants to expand into South America.

©2010 – thebusinessofmining.com

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