Twitter

Potash/Phosphate

Why a Potash-Agrium merger might end up growing on investors – Joe Chidley (Financial Post – September 1, 2016)

http://business.financialpost.com/

Nothing excites investors like fertilizer, apparently. On Tuesday, two Canadian heavyweights in the business — Calgary-based Agrium Inc. and Saskatoon-based Potash Corp. — confirmed they were in talks to get together, and investors jumped on the haywagon. Since news of this potential “merger of equals” broke, Potash shares have climbed by more than 12 per cent, Agrium’s by nearly eight.

No doubt, there is a lot that makes sense about this deal, should it happen. Potash Corp. is the world’s largest producer of, well, potash (nutrient-form potassium), and also has its hand in nitrogen and phosphorus — the other two elements in the fertilizer triumvirate. Agrium produces its own fair share of P-N-K, too, but also manages a mega-network of North American agricultural stores.

With a merger, both companies would enjoy less competition (and the global fertilizer industry is highly competitive); Potash would diversify its revenue stream; Agrium would get enhanced production capacity. Add in the usual merger-benefit expectations — synergies, efficiencies, cost reductions, etc. — and the markets have got very excited, indeed.

Read more

Potash developments spark Saskatchewan political fight – by Jennifer Quesnel (CBC News Saskatoon – August 31, 2016)

http://www.cbc.ca/news/canada/saskatoon/

NDP Opposition critical of move to allow Chinese government-owned Yancoal to mine Sask. potash

As PotashCorp and Agrium enter negotiations on a possible merger, Saskatchewan political leaders can agree on one thing: they want to keep jobs in Saskatchewan, and keep potash royalties streaming into provincial coffers.

They differ on their approach to the potash industry’s future. A few hours after both fertilizer companies announced merger talks Tuesday, Premier Brad Wall told reporters at the provincial legislature he’d spoken with both companies’ CEOs, and sees positives in a potential deal.

“We would want to see Sask’s interests protected and furthered,” Wall said. “We would view this potentially, if it were to come to fruition, as an opportunity to perhaps pursue an even greater corporate presence in Saskatchewan on behalf of the new merged entity.”

Read more

Rival bids would deepen intrigue in potash saga – by Andrew Willis (Globe and Mail – August 31, 2016)

http://www.theglobeandmail.com/

Fertilizer giants Potash Corp. of Saskatchewan Inc. and Agrium Inc. left the door ever so slightly open to a competing offer for their companies after they were forced Tuesday to reveal that they are working on a multibillion-dollar merger.

Rival resource companies are duty-bound to see whether they can squeeze through that crack, egged on by bankers anxious to play a role in the biggest commodity deal in years.

As the latest converts to the logic that bigger is better when it comes to commodities, Potash and Agrium are talking about a “merger of equals” that would create an entity worth more than $35-billion. That approach dictates that neither company’s shareholders receive a takeover premium, and there’s no cash – only an exchange of shares.

Read more

Fertilizer giants Potash Corp., Agrium in merger talks – by Rachelle Younglai (Globe and Mail – August 31, 2016)

http://www.theglobeandmail.com/

Potash Corp. of Saskatchewan Inc. and Agrium Inc. said that they are in preliminary talks to merge, as the two Canadian companies grapple with weak fertilizer prices and a glut of potash in the market.

The companies said no agreement has been reached and there was no guarantee that the discussions would lead to a deal. Talk of a merger comes as the oversupply of potash has crimped corporate profits and given buyers such as China the upper hand.

Potash Corp. has seen prices for potash plunge to $154 (U.S.) a tonne in the second quarter from $273 last year. Its other two products, nitrogen and phosphate, have also lost value. This is the second time Potash Corp.’s relatively new CEO, Jochen Tilk, has tried to consolidate the fertilizer industry since taking over as chief executive in 2014.

Read more

Agrium Inc, Potash Corp of Saskatchewan Inc in advanced merger talks: sources – by Ed Hammond, Matthew Monks and Dinesh Nair (Bloomberg News/Financial Post – August 30, 2016)

http://business.financialpost.com/

Potash Corp. of Saskatchewan Inc., the world’s second-largest producer of its namesake fertilizer, and Agrium Inc. are planning to merge, people familiar with the matter said, as the companies battle falling prices and a decline in spending from farmers.

The combination could be announced as soon as next week, the people said, asking not to be identified because the deliberations are private. No final decisions have been made and the Canadian companies could decide against a deal, they said.

Potash has a market capitalization of about US$14.6 billion while Agrium is valued at about US$13.2 billion. Both companies surged 12 per cent in New York trading on Tuesday. Other fertilizer producers, including Intrepid Potash Inc. and CF Industries Holdings Inc., also jumped.

Read more

Commissioning of Legacy potash mine underway: K+S (Saskatoon StarPhoenix – August 24, 2016)

http://thestarphoenix.com/

Just over a month after a major accident derailed K+S Potash Canada’s plan to bring its Legacy solution mine into production by the end of the year, the company has begun commissioning the massive $4.1 billion potash project.

“Legacy will make an important contribution to the future viability of K+S,” Ralf Bethke, chairman of the supervisory board of K+S AG, K+S Potash Canada’s parent company, said in a statement.

“The new plant will ensure that the company has access to high-grade resources for generations and will strengthen the position of K+S on the international potash market sustainably.”

Read more

Second worker this month injured at Agrium’s Vanscoy potash mine – by Alex MacPherson (Saskatoon StarPhoenix – August 23, 2016)

http://thestarphoenix.com/

A miner was airlifted to hospital in Saskatoon Sunday morning after suffering major injuries in the second underground accident this month at Agrium Inc.’s Vanscoy potash mine.

“He had serious injuries and had some surgery (Sunday) and he’s recovering from that surgery right now,” said Todd Steen, general manager of the mine, which is located about 30 kilometres southwest of Saskatoon.

Details about what caused the accident will be available when an investigation is complete, but it is “not related” to the Aug. 8 incident that led to the death of 29-year-old Chad Wiklun, Steen said. “It’s very unfortunate that we had another incident here, and we want to make sure we don’t have any more, and we want to make sure we get to the bottom of these.”

Read more

New CEO, directors at Encanto could advance potash project at Muskowekwan First Nation – by Bruce Johnston (Regina Leader-Post – August 22, 2016)

http://leaderpost.com/

A big shakeup at Encanto Potash Corp., which saw the CEO replaced and several directors resign from the company’s board of directors, could breathe new life into the company’s proposed $3-billion potash project at Muskowekwan First Nation, about 100 km northeast of Regina.

Norman Brewster, president and CEO of Cadillac Ventures Inc., was named CEO of Encanto earlier this month, replacing Jim Walchuk, who will stay on as an adviser. In addition to Brewster, six new directors were appointed to Encanto’s board of directors, including Muskowekwan First Nation Chief Reg Bellerose as First Nations special counsel. The company also moved its headquarters from Vancouver to Toronto.

Brewster said the financial markets haven’t been keen about financing new potash projects, especially since the price of potash plummeted from nearly US$900 a tonne in 2008 to less than US$200 per tonne in recent months.

Read more

Russia’s Fertilizer Tycoon Says Potash Glut May Last a Decade – by Yuliya Fedorinova (Bloomberg News – August 18, 2016)

http://www.bloomberg.com/

Russian billionaire Andrey Melnichenko, whose fertilizer company is investing more than $6 billion in potash mining, said it could take at least a decade for the potash market to work off the excess because of the past “disruptive” actions by the largest sellers.

Potash prices have collapsed since 2013, when a trade pact between Russian and Belarusian producers, which helped prop up the market, fell apart. At the time, Canpotex Ltd., a Canadian potash exporter, and Belarusian Potash Co. controlled about 80 percent of global exports.

Their tactics kept prices at high levels, which encouraged new investment from other companies and led to excess supply, said Melnichenko, who owns EuroChem Group AG and is Russia’s eighth-richest man, according to estimates from the Bloomberg Billionaires Index. Potash fell to a decade low of about $220 to $230 a ton this year on continued oversupply. In 2008, it reached above $900 a ton.

Read more

BHP’s Saskatchewan potash project may be mothballed after $2.6-billion spent – by Jesse Riseborough (Bloomberg/Globe and Mail – August 17, 2016)

http://www.theglobeandmail.com/

BHP Billiton Ltd., the world’s biggest mining company, may end up “mothballing” its Canadian potash project by the end of this decade after completing two shafts at a cost of about $2.6-billion.

The shafts at the giant potash deposit in Saskatchewan are now at a depth of about 600 metres, with a further 300 to 400 metres to go, chief executive officer Andrew Mackenzie told analysts and investors in London on Tuesday. Upon their completion in 2018 or 2019, the board will decide whether to build the mine, he said.

“It’s certainly perfectly possible, if at that time the market is not going to be ready for potash, say, in three years subsequently, that we could mothball the shafts once we’ve completed them,” Mackenzie said.

Read more

BHP may mothball $2.6 billion Jansen potash project if prices remain weak – by Cecilia Jamasmie (Mining.com – August 16, 2016)

http://www.mining.com/

World’s largest miner BHP Billiton (ASX, NYSE:BHP) (LON:BLT), the company behind the massive $2.6 billion (CAD $3.4 billion) Jansen potash project in Canada’s Saskatchewan province, may place it in the back burner if prices for the fertilizer ingredient don’t pick up by the end of the decade.

The company, which posted Tuesday its worst-ever annual loss, had already cut $130 million from the planned $330 million capital expenditure to develop and study the feasibility of the Jansen project in the current financial year.

And while BHP continues looking for a partner to finally take the venture off the ground, it now admits that the ongoing slump in potash prices may make it mothball the project.

Read more

No quick end to potash doldrums in Saskatchewan as capacity ramps up – by Ian Bickis (CBC News Saskatchewan – August 15, 2016)

http://www.cbc.ca/news/canada/saskatchewan/

Oversupply leads to steep drop in potash prices

Oil’s downfall may get more attention but the potash industry that forms the bedrock of the Prairie mining industry is going through its own bust — and analysts say there’s no quick recovery in sight.

Potash, the lightly coloured mineral used as a crop fertilizer, is big business in Canada. Last year, producers dug out $6.7-billion worth of it, putting it second only to gold in terms of produced mineral value in the country.

But like oil, a wave of overbuilding and production increases in recent years — spurred by a spike in crop prices and a perceived demand that didn’t quite materialize — have left the market flooded with supply. “We have become grossly oversupplied with potash,” said David Asbridge, president of fertilizer advisory firm NPKFAS. “It’s going to take a while for us to dig ourselves out of this hole.”

Read more

Sask. government approves Yancoal potash mine environmental assessment (CBC News Saskatchewan – August 9, 2016)

http://www.cbc.ca/news/canada/saskatchewan/

Company from China must meet new conditions before final approval for project near Southey

The government of Saskatchewan has approved an environmental assessment for a proposed Yancoal potash mine near Southey, Sask. The 3,000-page impact statement was prepared by the Chinese government-owned Yancoal. The statement, along with more than 800 submissions of public feedback, was reviewed by a Saskatchewan government panel.

Yancoal’s impact statement reviewed potential concerns, including local infrastructure, impact on ground water supply and air quality monitoring.

In order for the project to move forward, Yancoal must now meet a number of conditions, including creating a community involvement plan, forming a community advisory committee and committing to isolating the site from nearby waterways to “to ensure no off-site impacts to water quality,” the government said in a news release.

Read more

Potash Corp cuts profit forecast and slashes dividend, but says market has hit bottom – by Peter Koven (Financial Post – July 29, 2016)

http://business.financialpost.com/

The management team at Potash Corp. of Saskatchewan Inc. is developing a lengthy track record of being too optimistic about its industry’s prospects.

The Saskatoon-based company slashed its earnings guidance for the fifth time in six quarters on Thursday as its realized potash prices plunged to stunning lows. Potash Corp. also cut its quarterly dividend 60 per cent to US10 cents a share, the second time this year it has reduced the payout.

Yet despite the grim news, the fertilizer giant believes the potash market really has reached its “low point” this time, and better days are ahead.

Read more

New China deal casts dim light on Canadian potash sector – by Ian McGugan (Globe and Mail – July 15, 2016)

http://www.theglobeandmail.com/

A new deal to sell potash to Chinese buyers at a price dramatically lower than last year is being taken as good news by investors in Canadian potash stocks – a sign of just how far expectations for the sector have fallen.

Belaruskali, the major Belarusian producer, signed a contract to deliver potash to Chinese buyers for $219 (U.S.) a tonne, according to several industry observers on Thursday. Although the reported price is nearly one-third less than the $315 a tonne that was agreed upon last year, it is better than analysts had feared.

Still, the size of the decline demonstrates how much the market for the crop nutrient has deteriorated in recent months. It also underscores concerns about whether Potash Corp. of Saskatchewan Inc., one of this country’s most-followed dividend stocks, will be able to maintain its generous payout.

Read more