Potash price drop unlikely to shutter high-cost mines

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

A move by top global potash producer Uralkali to quit its export partnership and seek to maximize sales volumes is unlikely to weed out higher-cost producers, the chief financial officer of rival Potash Corp of Saskatchewan said on Wednesday.

Russia's Uralkali OAO broke up Belarusian Potash Co (BPC) in July and predicted the price of potash would plummet 25 percent to less than $300 per tonne.

If the idea was to drive prices low enough to force rivals to shed production capacity for the crop nutrient, it is not likely to work, said Potash Corp Chief Financial Officer Wayne Brownlee at the Credit Suisse Global Chemical and Ag Science conference in New York.

Companies with high-cost mines may operate in a negative cash-flow position temporarily, or idle mines until prices improve, but they are unlikely to abandon them, Brownlee said.

"If you underestimate the staying power of that capacity, then you're probably making a mistake."

Uralkali and Potash Corp are considered by analysts to be low-cost producers, while European mines operated by K+S AG and Israel Chemicals are at the high end, along with U.S.-based Intrepid Potash.

A spokeswoman for Uralkali could not be immediately reached for comment.

On Tuesday, Mosaic Co CEO Jim Prokopanko said Uralkali's revamped potash marketing plan fails the "economic sniff test."

Potash miners, especially Potash Corp, have been aggressively adding mining capacity, although several projects by other miners have been delayed or canceled in the past year as weaker prices left them uneconomical.

The breakup of BPC has resulted in offshore potash sales being "essentially paralyzed," as buyers feared getting stuck with inventory that could fall in value, Brownlee said.

"But we certainly haven't seen anybody in the marketplace force a low price to achieve higher volume. There's been a bit of a disconnect so far between the actions and the words."

Shares of Potash Corp, the world's biggest producer of the crop nutrient by capacity, eased slightly in New York and Toronto on Wednesday. They are down 14 percent since Uralkali quit BPC on July 30.

Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...

Comments (0) Leave a comment 

e-Mail (required)


characters left

Smooth Wall Grain Bins

Meridian’s SmoothWall bins are the ultimate storage bins, used to handle and store fertilizer, grain, feed and seed, and extend ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form