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Potash/Phosphate

PotashCorp N.B. unfazed by potash stock slump – (CBC News New Brunswick – August 1, 2013)

 

http://www.cbc.ca/nb/

Changes to the global potash market threaten Canadian price stability

The collapse of a potash cartel in Eastern Europe earlier this week caused panicky selling in the stock market, and raised fears about potash revenue and royalties in New Brunswick. However, the general manager of PotashCorp in New Brunswick appears unfazed.

Shares of major North American potash producers fell sharply Tuesday on word that the Russian company, OAO Uralkali is pulling out of a marketing group and is expected to undercut competitors’ prices for the fertilizer.

The company announced it was withdrawing from a joint venture with another company from Belarus that set the price for about a third of the world’s potash supply. Instead, it plans to sell more potash to China, which buys about one fifth of the world’s supply of the fertilizer.

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Changing potash landscape a boon for China, India – by Brenda Bouw (Globe and Mail – August 1, 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.

China and India are poised to gain greater control over global potash pricing now that the oligopoly that controlled the majority of trade in the crop fertilizer, a key Canadian export, has been dismantled.

This week’s breakup of Belarus Potash Co. (BPC), a joint venture between Russia’s Uralkali and Belaruss’s Belaruskali, puts the world’s two most populous countries in a much stronger position after years of resistance to prices set by both BPC and Canada’s Canpotex Ltd.

Until now, the two groups controlled more than two-thirds of global potash sales. Saskatoon-based Canpotex is owned by Potash Corp. of Saskatchewan, Agrium Inc. and Mosaic Co.

The new landscape is expected to lower potash prices, which would increase demand and crop yields, particularly in high-demand countries such as China, India and Brazil. That in turn could help contribute to lower global food prices, which economists say are falling on expanded crop planting.

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Down with [potash] cartels, comrade – by William Watson (National Post – August 1, 2013)

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

The hungry of the world, who clearly would benefit from a 25% lower price of a key fertilizer, shouldn’t count their cheaper meals before they’re grown

Belarus’s President Alexander Lukashenko, Europe’s last remaining dictator, seems an unlikely devotee of Adam Smith. Yet his Decree Number 566 last December — decrees are a large part of his leadership style — is what so annoyed his Russian partners in the Eurasian half of the world potash cartel that they announced Tuesday they would be letting their exports rip, as they claim the Belarussians have already done in sales to China and India.

The other third of this Putin-Lukashenko troika is, ahem, us. We run the North American half of the cartel through Canpotex, the Saskatchewan potash export consortium formed in 1972, just about the time in fact that we were also putting together domestic cartels over milk, cheese, eggs and poultry. Trudeau times, recall, were managed-economy times.

The consensus view seems to be that this jolt of Smithian competition into the long-cartelized world market will bring potash prices down from above US$400/tonne to something more like US$300.

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Toward less of a potash oligopoly – Editorial (Globe and Mail – July 31, 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.

The breakup of Belarus Potash Co., one of two international potash cartels, is good news for consumers and farmers across the world, which carries a promise of less expensive fertilizer and (as a result) cheaper food. It is hard to see how BPC’s North American equivalent, Canpotex International Pte. Ltd., the marketing organization shared by Potash Corp. of Saskatchewan Inc., Agrium Inc. and The Mosaic Co., will be able to maintain potash prices at their previous levels. The raison d’être of Canpotex is likely to be in question. Without the quasi-duopoly of Canpotex and BPC, the potash market will be substantially more competitive.

OAO Uralkali, the Russian member of BPC, has accused its former Belarussian partner, Belaruskali, of selling potash outside BPC. Indeed, last December, the dictatorial President of Belarus, Alexander Lukashenko, issued a decree cancelling BPC’s exclusive right to market and export Belarussian potash; maybe Belaruskali was just being obedient.

But Uralkali may have another motive, too; it has the advantage of being able to ship potash directly by rail to China, a country with a great appetite for fertilizer. Uralkali appears to have decided to seek buyers by offering attractive prices, rather than by restricting supply.

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Russia’s potash breakup a ‘game-changer’ for Canadian industry – by Brenda Bouw (Globe and Mail – July 31, 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.

The dramatic breakup of the world’s largest potash oligopoly promises to reshape the industry and send prices tumbling, threatening the profit-making power of the marketing group that sells Saskatchewan potash to global customers.

Russia’s Uralkali said it is walking away from its Belarus Potash Company (BPC) joint venture with partner Belaruskali in order to sell potash on its own to hungry markets in China and India. The move is expected to shatter the industry’s supply-demand picture and spur a global potash price war.

It’s also a serious blow for Canpotex Ltd., the potash marketing group made up of Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc. The shares of all three companies were hit hard; combined, they lost nearly $9-billion in stock-market value. Potash Corp., one of Canada’s biggest mining companies, fell 16 per cent to $32.66. Analysts warn Canpotex’s pricing leverage could soon disappear, clobbering profits for each public company.

“This is a game-changer,” said John Chu, an analyst at Alta-Corp. Capital Inc.

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Saskatchewan economy can weather potash storm – by Claudia Cattaneo (National Post – July 31, 2013)

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

CALGARY – Saskatchewan will feel the impact of a global potash price war triggered by Russia, but the blow will be lessened by industry efficiencies and continuing growth in other sectors such as oil and uranium. “We remain extraordinarily bullish,” Kent Windsor-Smith, executive director of the Greater Saskatoon Chamber of Commerce, said Tuesday.

“We don’t foresee anything slowing us in 2013. We are expecting to see a modest slowdown in the growth rate in 2014, but that was probably in the cards already and it related to the fact that a number of these capital projects are winding down and moving toward completion.”

Saskatchewan’s potash sector, which produces about a third of the world’s supply of the crop nutrient, spent heavily in recent years to modernize operations and reduce costs, making it well-positioned to weather pricing pressures, he said, while “producers in other parts of the planet may not be as cost competitive.”

Meanwhile, the province’s diversified economy, which has been growing at a blistering pace, will continue to be supported by spending in oil and uranium, and a stable agriculture base.

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‘The end of the potash world as we know it’ is no exaggeration – by Peter Koven (National Post – July 31, 2013)

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

For the potash industry, this would change everything.

If Russian producer OAO Uralkali follows through on its plan to max out production and collapse one of the sector’s two trading arms, the industry’s oligopoly-like business model is thrown out the window.

The days in which the potash producers withheld production to maintain pricing influence could break down completely. Instead, experts said the stage would be set for a dramatic battle for market share, with the companies running at much higher production capacity and selling far more product. Higher supply would mean lower prices, greater competition and a culling of higher-cost producers and eager new entrants.

In short, the potash business would start to resemble a normal commodity business. BMO analyst Joel Jackson called it “the end of the potash world as we know it,” which is no exaggeration.

Markets were rattled at that prospect. Shares of every potash producer in the world plunged on Tuesday as investors absorbed the idea of global prices falling by US$100 a tonne or more.

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UPDATE 4-Potash sector rocked as Uralkali quits cartel; price slump seen – by Polina Devitt and Natalia Shurmina (Reuters India – July 30, 2013)

http://in.reuters.com/

MOSCOW, July 30 (Reuters) – Russia’s Uralkali has dismantled the world’s largest potash cartel in a move that it expects to slash prices by 25 percent, heralding a reshaped industry and pummelling shares of companies that produce the key fertiliser ingredient.

The break-up of the Belarus Potash Company (BPC), a joint venture with Belarussian partner Belaruskali, could cause a price war and leaves North America’s Canpotex as the dominant potash export venture.

It could also lead to cancellations of projects by rivals as the industry weighs the effect of lower prices, but may feed through to better deals for farmers and ultimately consumers. U.S.-listed shares of the Canpotex owners – Potash Corp of Saskatchewan, Mosaic Co and Agrium Inc – plummetted, cutting their market value by nearly $15 billion.

BPC and Canpotex had accounted for 70 percent of global trade in potash, and the duopoly had set identical prices in key markets such as China and India.

“In the last few years, BPC and Canpotex … succeeded by raising potash prices much above their production cost,” a senior official at a major Indian potash firm said, asking not to be identified because of the sensitivity of the matter.

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Vale holds open houses on EIS for potash mine – by Regina Leader Post (July 19, 2013)

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

Vale Potash Canada held open house information meetings to discuss the environmental impact statement (EIS) for its proposed Kronau potash mine in Kronau, about 30 km southeast of Regina, on Wednesday and nearby White City on Thursday.

While the Brazilian mining giant’s proposed potash solution mine project was put on hold last August, there’s still considerable interest in the $3-billion project and its potential environmental impact on the area, according to a spokesperson for Vale Potash Canada.

“What we’re trying to get across to people is that if the Kronau project proceeds … the commitments attached to the EIS still apply,” said Lara Ludwig, community relations lead for Vale Potash Canada. About 170 people attended the Kronau session, which was similar to the crowd at the first public information meetings on the Kronau project in 2011, Ludwig said.

“A lot of people had questions about how the internal option analysis is going and what the status (of the project) is. From our perspective, … it was a good opportunity to reconnect and answer any questions.”

Last August, the giant mining company decided to temporarily suspend further work on the 2.9-million tonne per year project due to the tough global economy, although work on the EIS and finding a secure water source for the mine continued.

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The huge potential of Congo potash – by Lawrence Williams (Mineweb.com – July 5, 2013)

http://www.mineweb.com/

The Republic of Congo (ROC), not to be confused with the neighbouring DRC, has the potential to develop into one of the world’s biggest potash miners over the next decade.

For those who are unaware there are two Congos. The former Belgian colony of the Democratic Republic of Congo – the DRC – is the one which is mostly in the news, with its huge and rich base and other industrial metals, gold and diamond resources. However, lying immediately to the west of much of the DRC on the northern side of the Congo river is the former French colony of the Republic of Congo (ROC – also known as Congo Brazzaville to more easily differentiate itself from its neighbour to the south.)

The ROC, like many African nations has had its own share of difficulties since it cast off its colonial yoke in 1960, but these have not been quite as violent as the problems which have continually beset the DRC over the years and there has been a relatively stable government in place under President Denis Sassou Nguessa since a bloody civil war in 1997. While certainly not exactly a model modern democracy, the ROC has been relatively stable for the past decade and President Sassou has won succeeding Presidential elections, although with suspiciously high percentage majorities!

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Canadian potash deal shows trend among Chinese – by Eddy Lok (China Daily U.S.A. – July 5, 2013)

sa.chinadaily.com.cn/index.

Chinese investment in a potash project in the Canadian province of Saskatchewan bodes well for junior mining companies in search of international financing, analysts say.

Vancouver-based Western Potash Corp, recently closed what it called was a strategic equity investment in the company by China BlueChemical Ltd and Guoxin International Investment Corporation.

Under the joint-venture deal, CBC (Canada) Holding Corp will make a strategic equity investment of $32 million in Western Potash at a price of 71 cents a share, according to a company news release.

As a result of this transaction CBC (Canada) Holding will hold a 19.9 percent ownership stake in the company on a non-diluted basis.

CBC (Canada) Holding is jointly owned by China BlueChemical Ltd and Benewood Holdings Corp Ltd. China BlueChemical is a majority-owned subsidiary of China National Offshore Oil Corporation, while Benewood is a wholly-owned subsidiary of Hong Kong registered Guoxin International Investment Corporation Limited.

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City sees big things in it’s future – Regina Leader Post Editorial (June 12, 2013)

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

The city councils of Saskatchewan’s two biggest cities are dreaming some pretty ambitious future population numbers these days – Saskatoon is eyeing expansion to over a million people while Regina is planning for 500,000.

Born of optimism from the continuing economic boom and rosy forecasts of long-term provincial economic growth fueled by natural resources and a resurgent agriculture sector, planners see the day when Regina and Saskatoon will be well over double their current size. In Regina’s case, that means annexing land on all sides of the city from the RM of Sherwood to accommodate expansion.

Are these projections realistic or just wishful thinking? Well, history does offer plenty of evidence for caution when it comes to population growth in this province.

Indeed, before the current economic boom began fuelling strong population growth less than 10 years ago, skeptics could point to the fact that Saskatchewan had a bigger population in the 1930s than in the 1970s. For example, the provincial population of 921,323 in 1976 was lower than that of 1936, when 931,547 people called the province home. And even though the province briefly surpassed the one-million mark in the 1980s, a stagnant economy and outmigration subsequently took the number down to 978,933 by 2001.

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Saskatchewan will need $20-$30B a year in capital – by Bruce Johnstone (Regina Leader Post – June 12, 2013)

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

Saskatchewan will need to attract $20 billion to $30 billion in capital investment annually for the next 20 years to finance its rapid economic and infrastructure growth, according to a Conference Board of Canada report.

How well the province manages this unprecedented demand for capital will largely determine whether or not Saskatchewan achieves its maximum growth potential, said the study, entitled Green Machine: Financing Growth in the New Saskatchewan.

About $38 billion in capital projects are currently underway, largely financed by multinational, out-of-province companies, with mining projects accounting for about 40 per cent of the work. But the province will require capital investment of $20 billion to $30 billion a year over the next two decades (2013 to 2032), to keep up with demand for oil and gas, mining and public infrastructure spending.

“This is not another commodity cycle. The force driving higher returns to crops and potash are real and long term,” the study said, noting that global population is expected to grow by 36 per cent by 2050, which will require another 945 million tonnes of cereal grains and 200 million tonnes of meat.

In addition to the capital demands of extractive industries, like oil and gas and mining, demand for public infrastructure, like roads, water and sewage treatment facilities, will also increase as the population grows to 1.4 million by 2035, the study said.

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Russian city awaits potash boom but outlook fragile – by Agence France-Presse/Global Post.com (June 11, 2013)

http://www.globalpost.com/

At first sight, Berezniki looks a typically bland provincial Russian outpost with its decrepit housing blocks and factory chimneys.

But the city in the Perm region of the Urals sits on a vast and hugely valuable secret — one of the world’s biggest deposits of potash, a mineral that is now coveted across the world as a fertiliser for food crops.

Berezniki, 1,200 kilometres (750 miles) east of Moscow, sits on the Verkhnekamsk deposit, which was discovered in 1925 and which was developed after World War II.

Its proven reserves represent some 34.5 percent of the world’s total and the deposit is the second biggest in the world after those in Saskatchewan in Canada, according to the US Geological Survey.

A veritable army of miners march up and down the kilometres of passages that have already been carved out 450 metres (1,500 feet) underground. Their machines work day and night to mine the pink coloured rock where the mineral is contained.

This is then taken to the surface by conveyors to extract the precious mineral. Once turned into powder or crystalised as granules, potash is used as a fertiliser to help crops grow and increase their immunity to disease.

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[Saskatchewan potash] Bethune Mine: Promises Lasting Legacy – by Ella McIntyre (Saskatoon StarPhoenix – June 11, 2013)

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

A promise of economic growth and employment, with an eye to ensuring long-lasting environmental and community well-being, is behind K + S Potash Canada’s $3.25 billion dollar solution mining Legacy Project planned for the Rural Municipality (RM) of Dufferin, near the village of Bethune. Bethune is approximately 50 kilometres from Regina.

“Not only is the Legacy Project Saskatchewan’s first potash mine in nearly 40 years, it is one of the world’s most economically attractive greenfield projects,” said Christine Stass, spokesperson for K+S Potash Canada and its parent K+S Group, a leading supplier of fertilizers and the world’s leading salt producer.

As Stass explains, with a potash price of between USD 400 and 450/tonne, the project achieves a Return on Capital Employed of 12 per cent and an attractive premium on K+S Group’s costs of capital. It also promotes important jobs and economic opportunities for Saskatchewan. By spring 2013, 200 to 300 people will be working on site which, at its peak, will provide over 1,100 jobs and roughly 6 million employment hours. The following two years will see rail construction, structures built and equipment installed and, by late 2015, plant commissioning and the site near completion. Once in full production, the mine will employ 320 permanent workers, with more jobs created through ongoing contract employment.

Potash production for the mine is anticipated for 2015. The operation will ramp up to full capacity of 2.86 million tonnes by 2023. With further expansion, production could increase up to 4 million tonnes per year.

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