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Potash/Phosphate

Future of potash is solid despite low prices – by Paul Sinkewicz (Saskatoon StarPhoenix – May 28, 2016)

http://thestarphoenix.com/

POSTMEDIA CONTENT WORKS – As potash prices remain depressed, the watchword for Saskatchewan’s major producers in 2016 is cost control. Prices for the fertilizer ingredient were more than $900 a tonne in 2008, but thanks to slumping demand for the mineral, they are now expected to stay in the $200 to $300 range for the next several years.

Already the world’s largest producer of potash, Saskatchewan had been enjoying the promise of even greater things ahead for the industry with firms investing billions in upgrades to existing sites and several new major mining operations taking shape.

The Mosaic Company alone has committed more than $3 billion to a new shaft at its Esterhazy mine. The K3 development has been underway since 2013, and remains on schedule and on budget, says Bruce Bodine, incoming senior vice-president, potash.

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A tale of two minerals: Overproduction, low demand, weak prices dog potash, uranium mining – by Bruce Johnstone (Regina Leader-Post – May 27, 2016)

http://thestarphoenix.com/

With apologies to Charles Dickens, it was the best of times and worst of times for Saskatchewan’s mining industry in 2015.

Both production volume and value of Saskatchewan’s most important mineral resources — potash and uranium — were up in 2015 over 2014. And, for the first time ever, Saskatchewan was ranked second in terms of the value of mineral production among Canada’s mining provinces last year.

But by the fourth quarter of 2015 and first quarter of 2016, overproduction and low prices resulted in potash and uranium mine shutdowns and layoffs.According to Natural Resources Canada, the value of Saskatchewan’s mineral production was $8.5 billion in 2015, with a nearly 20 per cent share of Canadian mineral production.

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Newfoundland’s Sisters of Mercy challenge Potash Corp in board room – by Michael Swan (The Catholic Register – May 25, 2016)

http://www.catholicregister.org/

The Sisters of Mercy of Newfoundland lost a vote at the May 11 Annual General Meeting of Potash Corporation of Saskatchewan, Inc., but they won attention from the mining giant’s management.

The community of 95 Catholic sisters were asking the company, currently valued at $14.7 billion on the Toronto Stock Exchange, to undertake a human rights study of its operations in the Western Sahara. The proposal garnered just 6.7 per cent of the votes at the 2015 AGM, but it attracted support from 31.6 per cent of the outstanding shares — including the votes of major institutional investors this year.

The sisters’ motion was backed by the British Columbia Investment Management Corporation, which handles pension funds for BC public servants, the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan among others — totalling 159,593,972 shares voting for the motion, versus 344,850,348 shares against.

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Potash Corp sees Chinese supply contract settling within weeks – by Rod Nickel (Reuters U.S. – May 19, 2016)

http://www.reuters.com/

NEW YORK – May 19 Potash supply contracts with Chinese buyers should be settled in two to four weeks, the chief executive of Potash Corp of Saskatchewan said on Thursday, setting a badly needed global price floor for the slumping crop nutrient.

Potash prices have fallen to their lowest in a decade, weakened by declining U.S. farmer incomes, falling currencies in consuming markets such as Brazil and bloated mining capacity. The Chinese contract usually sets a floor for a subsequent contract with Indian buyers and spot prices for Brazil and the United States.

Chief Executive Jochen Tilk was speaking at a BMO investor conference in New York. Afterward, he told Reuters he expected Chinese buyers to settle first with Belaruskali and Russia’s Uralkali, as is typical.

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[Potash Corp. and Western Sahara] Companies need to do due diligence on human rights abroad – by Fred Pinto and Peter Chapman (Globe and Mail – May 10, 2016)

http://www.theglobeandmail.com/

The sale of Canadian military vehicles to Saudi Arabia has once again raised the age-old debate over whether Canada should do business with countries that have dubious human-rights records or in conflict-torn regions.

But it’s not just a question for governments to address. Companies also need to understand the human-rights risks they face in overseas operations and supply chains. And, increasingly, their investors do, too.

New international instruments such as the United Nations Guiding Principles on Business and Human Rights as well as new reporting requirements under securities regulations are increasingly emphasizing the need for global businesses to assess their own human-rights risks, and to take steps to ensure that they are not contributing to rights violations.

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UPDATE 4-Potash Corp cuts 2016 profit forecast, dividend seen at risk – by Rod Nickel and Arathy S Nair Reuters India – April 29, 2016)

http://in.reuters.com/

April 28 Canada’s Potash Corp of Saskatchewan , the world’s biggest fertilizer company by capacity, cut its full-year profit forecast on weak demand and lower prices on Thursday, raising concerns of another dividend cut.

The company in January cut its dividend by 34 percent to $1 on an annual basis as potash prices plunged due to overcapacity and weak currencies in major consumers such as India and Brazil. BMO analyst Joel Jackson said Potash may need to cut the dividend further as it represents 143 percent of its estimated profit this year.

U.S.-listed shares of Potash fell 3 percent to $17.61 after the company posted an 80 percent plunge in first-quarter profit. Potash is monitoring its dividend level, but an adjustment would be premature until the company better understands when the market will recover, Chief Executive Jochen Tilk told analysts on a conference call to discuss earnings.

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UPDATE 1-Vale eyes restart of Argentina potash project (Reuters U.S. – April 27, 2016)

http://www.reuters.com/

BUENOS AIRES – Brazilian miner Vale SA is considering a restart of its Rio Colorado potash project in Argentina after a long delay, the company said on Wednesday, the latest sign that international investors are eyeing a return to the country.

Vale suspended work on its Rio Colorado project in the western province of Mendoza in 2012, having already invested $2.2 billion, as prices for the key crop nutrient crashed and after the former government refused to offer tax concessions to mitigate soaring costs related to Argentina’s inflation and exchange rate.

Vale is now looking to invest $1.5 billion to restart construction at Rio Colorado in coming months, a spokesman at Mendoza’s energy ministry said. Vale said it had discussed a possible development plan with the Mendoza government, without giving figures.

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Delays in Chinese potash deals underscores industry troubles – by Ian McGugan (Globe and Mail – April 13, 2016)

http://www.theglobeandmail.com/

The most important thing happening in the potash industry right now is what is not happening. Producers from Canada, Russia and Belarus have yet to sign 2016 contracts with Chinese importers. The price China pays for potash is considered a key benchmark for the commodity and deals in past years have often been concluded in January, setting the tone for the year ahead.

Last year, when negotiations dragged into March, it was considered a worrisome portent for potash producers. This year’s even longer delay underscores the growing strains on the industry. Swelling supply of the crop nutrient and slumping demand continue to drag down spot prices, while ample customer inventories provide little reason for Chinese buyers to rush into a contract.

In a report entitled “It just feels like another leg down is coming,” Joel Jackson of BMO Capital Markets predicted this week that Chinese contracts will settle around $240 (U.S.) a tonne, a steep fall from $315 a tonne last year.

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Canadian firms dominate phosphate imports from Western Sahara: report – by Peter Koven (Financial Post – April 8, 2016)

http://business.financialpost.com/

Two Canadian fertilizer firms have become the dominant buyers of phosphate rock from the disputed territory of Western Sahara after other companies stopped the practice, according to a report.

The study, released Friday by Western Sahara Resource Watch (WSRW), found that Potash Corp. of Saskatchewan Inc. and Agrium Inc. shipped a combined 916,000 tonnes of phosphate from the territory last year. That accounted for 64.5 per cent of all purchases from Western Sahara in 2015. Potash Corp. shipped 474,000 tonnes and Agrium shipped 442,000, the report said.

“Agrium and Potash Corp. are by far the biggest importers,” Erik Hagen, a WSRW board member, said in an interview. These shipments are controversial because of Western Sahara’s unique status. It is the last remaining colony in Africa, but is under the de facto control of Morocco, which claimed sovereignty over the area after Spain withdrew in 1975.

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Wynyard, Sask., ‘really excited’ for new potash mine (CBC News Saskatoon – March 16, 2016)

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

A new potash mine set to open near Wynyard, Sask., a town about 190 kilometres southeast of Saskatoon, has the community “really excited.”

“It’s great news for our community,” said Wynyard mayor Ted Czarnecki. “It’s rare that you hear much good news these days with all the uncertainty of projects out there.”

Karnalyte Resources Inc., a Saskatoon-based potash company, announced Monday that an agreement had been made with an India-based fertilizer company, Gujarat State Fertilizers and Chemicals Ltd., to finance the construction of a potash mine and a mineral mine in Wynyard.

Karnalyte founder and president Robin Phinney said this is the company’s most significant milestone, with a fully-financed deal to build the potash mine in Saskatchewan.

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India’s GSFC backstops first phase of Karnalyte’s Canada potash mine – by Rod Nickel (Reuters India – March 14, 2016)

http://in.reuters.com/

WINNIPEG, MANITOBA – India’s Gujarat State Fertilizers and Chemicals Ltd has agreed to guarantee payments on $700 million in debt to finance the first phase of Karnalyte Resources Inc’s Canadian potash mine project, Karnalyte said on Monday, adding supply even as other miners cut production. The company’s shares jumped 76 percent in Toronto to C$1.55.

Under the deal, a subsidiary of State Bank of India and other lenders would loan Saskatchewan-based Karnalyte most of the funds, with GSFC guaranteeing payments in exchange for a greater voting share. Karnalyte plans to make payments from cash flow and eventually issuing more shares.

The mine – to be located in Wynyard, Saskatchewan – would add supply to a struggling industry that has already seen production cuts by Potash Corp of Saskatchewan and others, due to weak crop prices and slack Brazilian demand.

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BHP Scales Back Canada Potash Spending Amid Commodities Downturn – by Jen Skerritt (Bloomberg News – March 11, 2016)

http://www.bloomberg.com/

BHP Billiton Ltd., the world’s biggest mining company, is reducing spending on a potash mine in the Canadian prairies by about one-third amid the decline in global commodity prices.

The Australian company is allocating less than $200 million in capital expenditure in the current financial year to develop and study the feasibility of the Jansen project, down from $330 million in the previous 12 months, said Giles Hellyer, president of BHP’s Canadian unit.

“We’re doing more with less,” Hellyer said in a March 4 telephone interview from Saskatoon, Saskatchewan. “The intent is to be a lot more effective and efficient in what we’re doing and complete the work over a slightly longer time horizon.”

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BHP Billiton Ltd still likes giant Saskatchewan potash project, but not in any hurry to develop – by Peter Koven (National Post – February 24, 2016)

http://business.financialpost.com/

The world’s biggest mining company says it is still keen to build the world’s biggest potash mine, despite a severe bear market in the crop nutrient. But it sure doesn’t seem to be in a hurry.

Andrew Mackenzie, BHP Billiton Ltd.’s chief executive, told investors on Tuesday that he doesn’t expect the potash market to make a serious recovery until the early 2020s. “It’s a long way off,” he said on a conference call to discuss half-year earnings.

Melbourne, Australia-based BHP is in the midst of a US$2.6-billion investment to build production shafts at its Jansen project in Saskatchewan. Jansen would be a game-changer in the industry, as BHP is aiming to produce eight million tonnes of potash a year, which would amount to nearly 15 per cent of global supply.

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Potash Corp. cuts dividend for first time amid lacklustre earnings – by Ian McGugan (Globe and Mail – January 29, 2016)

http://www.theglobeandmail.com/

Potash Corp. of Saskatchewan Inc. has slashed its dividend for the first time in the company’s history, highlighting the tension between generous shareholder payouts and dismal commodity prices across the resource sector.

Jochen Tilk, chief executive of the Saskatoon-based company, said in an interview that the board carefully researched alternatives before deciding on the cut, the first since the company’s initial public offering in 1989.

He said the goal was to arrive at a sustainable payout that would also protect the business’s strong balance sheet. The board ultimately decided to chop the annual dividend by 34 per cent, to $1 (U.S.) a year from $1.52.

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Mining: Phosphate, the green ore glimmers – by Amadou Oury Diallo and Stéphane Ballong (The Africa Report – January 25, 2016)

http://www.theafricareport.com/

Low prices are not putting off international investors, who are piling into the phosphates sector in Togo, Guinea-Bissau, Gabon and Senegal, confident of future fertiliser needs. Is renaissance in the air for the phosphate sector?

Multinationals are jockeying for position, seeing potential in the continent’s push for food security and its current low fertiliser use: 4.7kg per resident compared to 200kg in India or China. While phosphate prices have fallen, with good-grade ore costing about $100 per tonne compared to $400 in 2008-2009, investment remains buoyant.

In early September, Togo awarded the huge Kpeme project to extract and process carbonated phosphate to Elenilto, the Israeli group led by Jacob Engen. With one of the largest deposits in sub-Saharan Africa (reserves are estimated at 2bn tonnes), the $1.4bn project will see the construction of a phosphoric acid plant and a fertiliser plant in the next three years.

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