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Potash/Phosphate

BHP talks up Canada potash prospects – by Peter Ker (Sydney Morning Herald – November 22, 2013)

http://www.smh.com.au/

BHP Billiton says it has been encouraged by recent work that suggests its push into the Canadian potash sector will be supported by further resources of the commodity close to its proposed Jansen mine.

BHP confirmed a gradual push into the potash sector in August, when it approved $US2.6 billion worth of spending on Jansen over five years, and since then the miner has described potash as having the potential to become a ”pillar” of the company alongside iron ore, coal, petroleum and copper.

Speaking at the company’s annual meeting in Perth on Thursday, BHP Billiton boss Andrew Mackenzie said exploration work had suggested that Jansen could be just the start of a ”basin-wide play” for BHP in the Canadian state of Saskatchewan.
”On its own Jansen is probably not a big enough resource for us to be a business that would rival our other four pillars, we need several Jansens,” he said,

”The news is good, we feel very confident that we now have many more Jansens that future generations of management can consider to think about this as a basin-wide play.”

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Russian billionaire Prokhorov to buy stake in potash giant Uralkali – by Polina Devitt (Globe and Mail – November 19, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MOSCOW — Reuters – Tycoon Mikhail Prokhorov has agreed to buy a stake in Uralkali, the world’s largest potash miner, as Russia seeks to ease tensions over the collapse of a potash sales cartel with Belarus that drove down global prices.

The deal was blessed by President Vladimir Putin, sources familiar with the matter said, in a bid to repair ties with Belarus President Alexander Lukashenko. Russia’s ally had arrested Uralkali’s boss after the Russian firm quit the marketing pact.

Prokhorov’s investment firm, Onexim, said on Monday that it expected to quickly complete the purchase of Suleiman Kerimov’s 21.75 per cent stake in Uralkali. Talks continued on the sale of stakes held by Kerimov’s partners to other buyers in side deals, which linked together would secure Prokhorov and his allies strategic control over the business.

Lukashenko, riled by the Uralkali gambit that which hit a major export earner for Belarus, has demanded that Kerimov sell out as a precondition for freeing Uralkali chief executive officer Vladislav Baumgertner from house arrest in Minsk.

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Aboriginal group’s planned potash mine looks to markets to India – by Rachelle Younglai (Globe and Mail – November 16, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

A First Nations group in Saskatchewan is in talks to sell potash to the Indian government, a move that would help vault the aboriginal group into the fertilizer industry and transform its economy.

The Muskowekwan First Nation sits on 25,000 hectares of land in the southeastern part of Saskatchewan where big North American fertilizer producers Potash Corp. of Saskatchewan Inc. and Mosaic Co. are already operating mines.

Owning the land could make it easier for the First Nation group to build the mine and give the aboriginal group an advantage over other entrepreneurs hoping to get into the fertilizer business as demand increases from growing economies in Asia.

“It’s not easy to find a project with one land owner,” said Reginald Bellerose, the chief for the Muskowekwan First Nation. But the group has some big hurdles to clear before the mine would become a reality. One is finding financing for the $3-billion project.

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Saskatchewan: the place to be [Mining and Oil] (Regina Leader-Post – November 13, 2013)

http://www.leaderpost.com/index.html

When it was announced in late September that Saskatchewan’s population had surpassed 1.1 million for the first time ever, Premier Brad Wall was quick to offer comment, and understandably so. According to the figures from Statistics Canada, the province had added 100,000 people since 2007. At the time of the announcement, it had grown by 6,895 in the preceding quarter-the largest increase in any quarter since Statistics Canada began keeping quarterly estimates.

“Saskatchewan is the place to be in Canada right now,” Wall said. “We have the strongest job growth and lowest unemployment in Canada, and we have a great quality of life in this province. “It’s a great place to find a job or start a business. It’s a great place to live and raise a family. It’s no wonder our population is growing.”

Such a statement is not hyperbolic. There are approximately 100,000 new Saskatchewan residents who apparently agree with Wall’s assessment of where their fortunes are potentially brightest. It’s one of the fastest and most sustained periods of population growth the province has experienced in living memory, and the latest signs of a sea change for a province that once saw its residents, its investment dollars and its economic fortunes trickle across its borders to other jurisdictions.

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UPDATE 2-Mosaic to buy CF’s phosphate business for $1.2 billion – by Rod Nickel (Reuters U.S. – October 28, 2013)

http://www.reuters.com/

Oct 28 (Reuters) – Mosaic Co said on Monday that it would buy the phosphate business of fellow U.S. fertilizer producer CF Industries Holdings Inc for $1.2 billion in cash, in a deal that bolsters each company’s core business.

The deal signals Illinois-based CF’s increased focus on its core nitrogen fertilizer products and comes after Mosaic has said it was looking to increase its production of phosphate, one of three critical crop nutrients.

Shares of CF, the largest U.S. nitrogen producer, was up 3.8 percent at $217.62 in midday New York Stock Exchange trading, while Mosaic, the world’s biggest producer of finished phosphate products, rose 0.2 percent to $46.02.

Minnesota-based Mosaic will acquire the South Pasture phosphate mine and plant, a phosphate manufacturing plant and ammonia terminal and warehouse facilities, all of which are in Florida.

The facilities produce about 1.8 million tonnes of phosphate fertilizer per year, topping up the annual 8.2 million tonnes produced by Mosaic and adding about 30 cents per share to its 2015 earnings, the company said. It expects the deal to close in the first half of 2014.

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Cartel collapse hits Potash Corp., prompting mining giant to cut outlook – by Rachelle Younglai (Globe and Mail – October 25, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Potash Corp. of Saskatchewan Inc. has cut its profit outlook for this year due to weak demand after the breakup of a Russian-Belarussian potash cartel sent prices of fertilizer tumbling.

The Saskatoon-based company, the world’s biggest potash producer, said on Thursday it would now earn between $2 to $2.20 a share this year, down from its previous forecast of between $2.45 and $2.70 per share.

The weaker forecast from Potash Corp. reflects difficulty the industry faces following the Belarus Potash Co. breakup in July. Russia’s OAO Uralkali withdrew from a partnership it had with rival Belarus’s Belaruskali, dismantling one of the two marketing alliances established to sell potash to the world.

The Belarus joint venture and its North American counterpart, Canpotex Ltd., controlled 70 per cent of the potash market before the breakup and therefore could influence the price and global supply of fertilizer. Potash does not trade on any public markets, leaving price formation almost entirely up to producers of the product and their customers.

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Canadian Agri-Business Linked to Moroccan Conflict Mineral – by Mitchell Anderson (TheTyee.ca – October 14, 2013)

http://www.thetyee.ca/

Agrium’s import of phosphate from occupied Western Sahara raises serious legal, ethical questions. Steaming towards Vancouver is a freighter holding almost $10 million of phosphate rock from Western Sahara — a region that has been militarily occupied by Morocco since 1975.

When the load arrives around Oct. 24 at Neptune Bulk Terminals in North Vancouver, it could be the first import of conflict minerals coming directly into Canada since the apartheid era in South Africa.

Plight of the Saharawi people

Calgary-based Agrium is the owner of the 60,000 tonnes of phosphate rock aboard the freighter Ultra Bellambi and has entered into an agreement with Moroccan state-owned company OCP to import one million tonnes each year until 2020. Agrium confirmed to The Tyee that at least some of this material is being sourced from Western Sahara.

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K+S potash mine project progressing on time and on budget – by Bruce Johnstone (Regina Leader Post – October 7, 2013)

http://www.leaderpost.com/index.html

Project near Bethune set to begin production in 2017

It looks more like a big oil discovery than a multi-billion-dollar mining project, but Saskatchewan’s first new potash mine in 40 years is taking shape and set to begin production in 2017, according to the head of K+S’s $4-billion Legacy mine project.

“We’re right on track, in terms of not only schedule, but budget,” said Sam Farris, vice-president and general manager of operations for K+S’s Legacy mine project.

The reason the Legacy project looks like a hot oil play is the presence of not one, but two, big drilling rigs on the gently rolling prairie just north of Buffalo Pound Lake. “They’re not much different than a conventional oil rig,” said Farris. In fact, the drilling rigs being used by K+S are oil drilling rigs operated by Akita Drilling Ltd. Instead of oil, however, K+S plans to produce a briny mixture composed of potash, salt and water from three different potash formations about 1,500 metres below the surface. That salty solution will be crystallized to form the “mother liquor” that will later be processed into three different potash products.

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Potash sector struggles with excess capacity – by Peter Koven (National Post – October 7, 2013)

The National Post is Canada’s second largest national paper.

Ten years ago, when Bill Doyle embarked on one of the biggest production expansion programs in the history of the potash business, there was an obvious rationale: the global population is rising, and the world has limited arable land to grow crops. More potash will be needed.

A decade later, that thesis remains as true as ever. But the logic of the expansion is not so obvious. The shareholders of Mr. Doyle’s company, Potash Corp. of Saskatchewan Inc., cannot help but think about two key numbers: nine and 17.

Nine million tonnes is Potash Corp.’s anticipated production level in 2013. Thanks to those expansion projects, its capacity will be 17.1 million tonnes by 2015. Even this year, Potash Corp.’s production will not come close to its capacity of 12.8 million tonnes. So what will it do with 17?

It is fair to say that this is not the scenario Mr. Doyle envisioned when he greenlighted the $8.3-billion expansion a decade ago. If even some of that money was returned to shareholders instead, they would have been ecstatic. It has led some onlookers to suggest that Potash Corp. and other producers, which are also ramping up production, have expanded too far and too fast, costing themselves pricing power.

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Farm and Food: Potash market isn’t for sissies – by Alan Guebert (Journal Star.com – October 5, 2013)

http://journalstar.com/ [Lincoln, Nebraska]

There are two reasons to keep up to speed on the fast pace of events in what would seem to be the very dull world of potash.

The first is that the key players in this once tightly controlled market continue to lose their grip on it. According to analysts, prices for this key fertilizer will continue to drop — to nearly $300 per ton, some say — through the end of 2013.

If they’re right, that’s more than $100 a ton less than a year ago and a gargantuan $600 to $700 per ton below the record price of five years ago.

In short, go long potash; it’s the best time in years to buy it and apply it. The second reason to pay attention to the potash market is that, in truth, you can’t take your eyes off of what quickly is turning into a Russian version of an American soap opera.

Nine weeks ago the Russian-Belarusian potash cartel, a rocky twosome composed of Russia’s Uralkali and Belarus’ Belaruskali, parted company when the Russians simply called their marriage off.

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Appetite for Destruction – by Damien Ma and William Adams (Foreign Policy Magazine – October 1, 2013)

http://www.foreignpolicy.com/

Why feeding China’s 1.3 billion people could leave the rest of the world hungry.

On Aug. 20, the Australian mining giant BHP Billiton announced that it will pump nearly $3 billion into developing a deposit of Canadian potash, a mineral used in the manufacture of fertilizer destined for farms fields across the world. And in late September, Chinese pork producer Shuanghui officially purchased Smithfield Foods in the largest Chinese acquisition ever made in the United States. The companies’ investments are both decisions that speak to a vote of confidence in global food consumption growth over the next decade — and nowhere will bellies be filling up faster than in China.

For three decades, resource-intensive manufacturing fueled China’s spectacular economic rise. By 2012, the country was consuming nearly half of the world’s coal and producing 46 percent of its steel, 43 percent of its aluminum, and about 60 percent of its cement. The Chinese economy has slowed in 2013 in part because of the government’s recognition that such a resource-intensive growth model has become unsustainable.

As a result, Beijing is trying to rebalance away from exports and investments and toward domestic consumption. Companies like BHP Billiton are betting that China’s rebalancing will spur rapid growth in demand for food and the inputs needed to produce it.

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Potash an essential and versatile commodity – by Andrew Livingston (Regina Leader-Post – September 28, 2013)

http://www.leaderpost.com/index.html

Potash mines are a common sight in Saskatchewan, and most residents are well aware that the industry commands billions of dollars on the global market and is an important component of the province’s economy. Less obvious, however, are its origins and its uses, which range from the biological to the chemical.

The term “potash” refers to not one, but several potassium compounds and potassium-bearing materials that contain water-soluble potassium. It is so named for the pre-industrial practice of using large, iron pots to collect potassium evaporated from wood ash. Eventually, the term would be applied to both naturally-occurring potassium salts and the substances produced through the industrial extraction and refinement of those salts.

Potassium is a metal, and an extremely active one at that. When ignited, it burns with a purple hue and, when introduced in its pure form into the atmosphere, it reacts violently with any oxygen and water that it encounters. Its interaction with water is particularly dramatic, creating corrosive potassium hydroxide and leaving free hydrogen atoms to react with other molecules.

Stable potassium salts were infused into the soil of this province beginning roughly 544 million years ago, between the Cambrian and Mississippian periods.

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Potash prices fluctuate with supply and demand – by Robyn Tocker (Regina Leader-Post – September 28, 2013)

http://www.leaderpost.com/index.html

Potash is one of Saskatchewan’s -and the world’s – most important minerals and, because of this, people watch carefully when the price fluctuates. Doug Elliott, the publisher of Sask Trends Monitor explained that, as with all commodities, the price of potash is a function of supply and demand. If there is an excess of demand or a shortage of supply, the prices go up.

The reverse is true as well – if demand falls off or the supply increases, prices will fall. Unlike most other minerals, potash is sold through several groups (known as marketing agencies or cartels) that try to manage supply and demand thereby controlling the price. “These [cartels] that try to manage the price have only some success,” said Elliott.

The long-term outlook for potash is positive. “The population of the world is growing and potash is important as a fertilizer to help grow more food for the expanding population. This will increase demand and help keep the prices high,” Elliott said. In terms of the short term, Elliott expects to see the price for potash to turn downward possibly to as low as $300 per tonne by the spring. He explained this could happen because of the recent collapse of one of the marketing agencies in Russia and Belarus.

When asked about BHP Billiton and its expansion plans for Jansen Potash Project, Elliott said it demonstrates that the company has a long-term view of potash’s future.

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Potash in our province – by Lori Wiens (Regina Leader-Post – September 28, 2013)

http://www.leaderpost.com/index.html

Potash mines 14 billion $investment in Saskatchewan

Potash has brought billions of dollars of investment to the province and is a fundamental part of the Saskatchewan economy, according to the minister responsible for energy and resources, Tourism Saskatchewan, and trade. “The current expansions at the existing potash mines have created almost $14 billion of investment in our province,” said Tim McMillan, whose portfolio falls under the ministry of the economy. “Many of those are completed, some are underway and some are still in the planning stages.”

He said the provincial government is also excited to see new mines being built for the first time in four decades. “For a lot of years, the policy choices were not conducive to development,” explained McMillan. “In fact, the CEO of K + S Potash has said they were upset for years about the way they were treated in Saskatchewan, but today they recognize our province is the best place in the world to do business. They are now investing $4 billion to develop the first new mine in Saskatchewan since the early 1970s.”

The intense focus on potash has been a welcome development for Saskatchewan, according to McMillan. “Ten years ago, potash was a sleepy commodity,” he said. “Now it is in the news on a regular basis.”

He attributes global interest to the demand for food as the world’s population continues to rise. “Countries like China and India, which have ever-increasing standards of living, want access to higher quality food,” he said.

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Digging in: Saskatchewan poised to remain world leader in potash – by Ryan Hall (Regina Leader-Post – September 28, 2013)

http://www.leaderpost.com/index.html

For decades, potash has been a linchpin of the Saskatchewan economy. From the earliest mining efforts in the 1950s and ’60s, up to the high volume trading that takes place today, a significant part of the history of mining in Saskatchewan is tied to potash production. Among the many groups working to make sure potash continues to be a part of the province’s future is the Saskatchewan Mining Association (SMA), which is concerned with representing and supporting a safe, responsible and growing Saskatchewan mining industry, and encouraging research and training within Saskatchewan. These mandates prove to be a demanding job, as Saskatchewan’s potash industry continues to grow.

Much of this development can be attributed to the wealth of potash that exists within the province. The prairie evaporate unit, which hosts the potash deposits, stretches from an area west of Saskatoon, east to Rocanville, and southward to Moose Jaw. As a result, recent estimates indicate that, at the current rate of production, Saskatchewan’s reserves will last for hundreds of years and will continue to provide a stable foundation for expansion.

Within Canada itself, Saskatchewan stands as the leading producer of potash, with over 85 per cent of the nation’s total coming from the province’s 10 operational mines. From these mines, approximately 14 million tonnes (Mt) of KCl was produced in 2012, with future expansions looking to add another five to 10 Mt of production by 2020.

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