JC: Yes. Developing countries are becoming richer, which leads...

JC: Yes. Developing countries are becoming richer, which leads to greater demand for beef, chicken and pork, which in turn leads to greater demand for cereals and grains.

TMR: Ding Xuedong also said that the CIC is "keen to work with the right partners to invest in greenfield projects." Can we then expect major Chinese investment in the Western fertilizer sector, as we have seen with oil and gas and the purchase of Smithfield?

JC: I'm a little skeptical about that. China is now the world's number one nitrogen producer, with four times as much capacity as Russia. And China is also number one in phosphate fertilizer production. The only area where it's actually lacking is potash. It does have some domestic reserves in the Qinghai Salt Lake Potash Company Ltd. (000792:SZSE). Once that ramps up to full capacity, it can probably meet 40% of China's domestic needs. CIC has just made investments in Uralkali (URKA:RTS; URKA:MCX; URKA:LSE), a Russian potash player, and has an equity stake in PotashCorp. (POT:TSX; POT:NYSE). But given how weak the markets are now, China is not likely in a big hurry to make any further major potash investments anytime soon

. TMR: What is the projected growth of the fertilizer sector, and can supply keep up with demand? JC: Potash has the strongest growth. This is driven by China, India and Brazil, which have considerable upside potential in potash demand. Historically, 5-to-10-year projections for annual potash demand growth have been in the 3–5% range. But that growth will come from a lower base, given how weak demand was last year.


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