(Yicai) Aug. 18 -- Qinghai Salt Lake Industry, China’s largest potash producer, has terminated its plan to become the controlling shareholder of Australia’s Highfield Resources for USD300 million to gain control of potash projects in Canada and Spain.

The working group established by Qinghai Salt Lake has conducted on-site due diligence on the resources, technology, and legal aspects of Highfield’s Southey project in Canada and Muga project in Spain and concluded that the conditions for advancing the acquisition are not ripe, the Golmud-based company said today.

Qinghai Salt Lake had unveiled the plan to buy the controlling stake in Highfield on May 12.

This is not the first time a Chinese company has pulled back from acquiring Highfield. Last September, Yankuang Energy Group announced it would invest USD376 million for a controlling stake in the Australian firm. However, the Jining-based coal miner said on May 12 that it would abandon this plan to support Qinghai Salt Lake’s proposal.

Highfield listed on the Australian Securities Exchange in February 2012. Its core asset, the Muga project, is still in the greenfield development stage and will produce one million tons of potash a year. Muga has proven reserves of 104 million tons, with a potassium chloride grade of 16.1 percent, according to the Joint Ore Reserves Committee Code.

China accounts for about 25 percent of the world’s total potash consumption. However, limited domestic production capacity has led to long-term reliance on imports, which have accounted for more than half of the country’s consumption for years.

Qinghai Salt Lake [SHE: 000792] closed 0.6 percent up at CNY19.28 (USD2.69) in Shenzhen today after gaining as much as 2.1 percent earlier.