Mosaic sees ‘potential’ for price rebound

  • 3 Aug 2016
  • The StarPhoenix
  • With Financial Post files

Mosaic sees ‘potential’ for price rebound

Less than a month after temporarily shutting down its Colonsay mine and laying off 330 workers, Mosaic Co. has become the second potash company with significant Saskatchewan operations to predict a price recovery.

“(W)e believe potash prices have bottomed and we see potential for modest price increases in the second half of the year,” the Plymouth, Minn.-based company’s president and CEO, Joc O’Rourke, said in a statement issued with its secondquarter results.

Mosaic, which has three mines in the province, reported US$457 million in second-quarter potash sales on Tuesday, down from the US$730 million it reported selling in the same quarter last year.

On a companywide basis, the fertilizer giant said it lost US$10.2 million, or US$0.03 per share, in the three months ended June 30, compared to the US$390.6 million, or US$1.08 per share, it earned in the same period in 2015.

Last month, the company said it planned to “idle” its Colonsay mine for the remainder of the year and rely instead on its Belle Plaine and Esterhazy mines, which are cheaper to operate.

O’Rourke said in the statement that the move was consistent with the firm’s plan to cut production in the face of reduced demand, and that it will result in lower costs for the rest of the year.

The global potash market is currently oversupplied. Prices, which peaked at around US$900 per tonne in 2008, have been mired below US$300 per tonne for more than a year and are expected to fall lower this year.

Last week, Potash Corp. of Saskatchewan slashed its earnings guidance by about a third, cut its dividend by 60 per cent and reported a 71 per cent drop in second-quarter earnings, to US$121 million from US$417 million in the same quarter last year.

At the same time, the Saskatoonbased mining company’s president and CEO, Jochen Tilk, said PotashCorp believes prices have hit their “low point,” and that global markets are set to rebound.

“With customer sentiment improving and announced industry shutdowns, we anticipate a more supportive potash environment through the balance of the year,” Tilk told reporters on a conference call.

Mosaic’s outlook appears to be similar. O’Rourke said in the company’s second-quarter statement that the steps it has taken to save money should leave it well-positioned when prices recover.

“While the environment is challenging, we see signs of stabilization in the second half of the year, with fertilizer prices bottoming and solid demand for our products.”

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on August 3, 2016, in economic impact, potash. Bookmark the permalink. Leave a comment.

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