PotashCorp forecasts robust demand
Temporary shutdowns at Allan, Lanigan still on as potash demand improves: PotashCorp
ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: October 26, 2017 | Last Updated: October 26, 2017 5:58 PM CST
The world’s largest fertilizer company still plans to temporarily shut down two of its mines this winter, despite record potash sales this quarter and its forecast for “robust” demand through the end of the year and into 2018.
Potash Corp. of Saskatchewan Inc. on Thursday confirmed it will halt production at the Allan and Lanigan mines for a total of 18 weeks, and temporarily lay off an undetermined number of workers, beginning next month.
“These are long-term plans we put together at the beginning of the year, and we do them at the same time as we do maintenance work (at the mines) … so we can’t skip them,” PotashCorp President and CEO Jochen Tilk said on a conference call.
“At the same time, we’ve taken shorter (production) downtimes than we had anticipated, to some extent, because demand is good. We plan them, we coincide them with maintenance work that we do, and we stick to them.”
The Saskatoon-based company made the announcement during what is expected to be its final quarterly financial report as an independent company ahead of its $US26 billion merger with Agrium Inc.
PotashCorp reported a 34 per cent decline in third quarter earnings compared to last year, but noted its year-to-date earnings are up 45 per cent: US$403 million in profit on US$3.5 billion in sales, compared to US$277 million on revenues of US$3.4 billion in 2016.
The company has previously said cost-cutting and “optimization” measures, including the decision to permanently close its only mine in New Brunswick, taken in the face of an oversupplied fertilizer market, are starting to take effect.
Tilk told reporters and analysts on the conference call that demand is up and market “fundamentals” have now improved for five consecutive quarters, leading to company record quarterly sales of 2.9 million tonnes of potash.
Asked whether the ramp-up of K+S Potash Canada’s new Bethune operation will affect PotashCorp’s business plan, Tilk said global demand of between 63 and 67 million tonnes means potash from the German company’s mine should “easily be absorbed.”
Tilk also confirmed that the merger with Calgary-based Agrium — which is expected to create Nutrien Ltd., a company with operations in 18 countries and 20,000 employees — remains on track to close before the end of the year.
The merger has come under scrutiny from Premier Brad Wall, who is concerned about maximizing the number of head office jobs in the province, and from the association of potash unions, which says there is still uncertainty about what it means for workers.