Next Potash Corp CEO likely to keep priority on price
The next chief executive of Canada's Potash Corp of Saskatchewan, the world's biggest fertilizer producer, is likely to stick with the company's strategy of supporting prices by managing supply, rather than shifting to a volume-driven scramble for market share.
Potash Corp's long-serving CEO, Bill Doyle, passes the torch to successor Jochen Tilk in July, but the charismatic Doyle will stay on as senior adviser for a year.
Doyle is likely the most recognizable figure in global trade in potash, a key nutrient for improving crop yields. His extended presence signals there will be no imminent change in Potash Corp's practice of scaling back output when demand slips, as the company did in December when it cut 18 percent of its workforce.
Because Potash Corp owns the most potash-producing capacity in the world, a change in that philosophy would cause the crop nutrient's value to plunge.
That's what happened last summer after Potash's chief rival, Russia's Uralkali OAO, quit the Belarusian Potash Co (BPC) trading partnership and said it would maximize sales volume.
A volume-driven battle for market share "is not going to happen," said Barry Schwartz, chief investment officer at investment management firm Baskin Financial.
Even so, Baskin just recently sold its stake in Potash Corp on concern that BPC's breakup has diminished the pricing power of potash miners. Potash Corp, Mosaic Co and Agrium Inc jointly own Canpotex Ltd, a company that collectively markets their potash production outside North America.
Global demand for potash is expected to rise in 2014, but key importers in China and India have for the past couple of years demonstrated an ability to drive deeper discounts on contracted volumes due to plentiful supplies.
Tilk is the former chief executive of Inmet Mining, a copper, zinc and gold producer that First Quantum Minerals acquired last year. In a brief statement on Sunday he said he shares Doyle's philosophy of running the company. He was not available for an interview on Monday.
Tilk, 50, studied mining at Germany's RWTH Aachen University in the 1980s before joining Inmet, according to his LinkedIn page. A Canadian citizen, he will live in Saskatoon, Saskatchewan, where Potash Corp is based, company spokesman Bill Johnson said.
If Potash Corp intended to fight for volume over price, it likely would not have chosen an operations-focused leader over a smooth salesman like Doyle, Spencer Churchill, analyst at Paradigm Capital, said in an interview.
"This guy is more of an efficiency guy, grinding out profits," he said.
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