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OIl prices and exchange rate down – bad and good for Saskatchewan

October 15, 2014
For 2014-15, when considering the provincial budget assumptions, it is estimated that :
• a US$1 per barrel change in the average WTI oil price results in an estimated $20 million change in oil royalties;
• a 1 U.S. cent change in the average value of the Canadian dollar results in an estimated $31 million change in non-renewable resources revenue.
Note, this is a full-year average and based on production amounts not deviating either.
The 2014/15 Saskatchewan budget was based on:
  • WTI oil prices are forecast to average US$94.25 per barrel in 2014-15
  • Exchange rate of 91.50
Today:
  • WTI is lower than forecasted at US$82.31 per barrel (not good for Saskatchewan)
  • Exchange rate is lower than forecasted at 88.31 (but this is good for Saskatchewan since we sell our oil and potash in US dollars and thus realise higher revenues)
Eric

Grain prices down; potash, uranium up #uranium #potash

30 Sep 2014
The StarPhoenix
BRUCE JOHNSTONE
LEADER-POST
Grain prices down; potash, uranium up
Agricultural index down in August
Commodity prices are a mixed bag for Saskatchewan producers, with most agricultural commodity prices down in August, including wheat, canola and hogs, while other commodities like cattle, uranium and potash are showing signs of strength, according to a bank commodity report released Monday.
Scotiabank’s commodity price index report indicated its agricultural index was down 6.7 per cent in August over the previous month, mainly due to declines in grain and livestock prices. “The decline was led by barley, pushed lower by very low U.S. corn prices, a competing grain for livestock and poultry,” the Scotiabank report said.
The silver lining for Saskatchewan wheat producers is that some higher-grade crops left over from last year are fetching good prices because of the large, but relatively low-quality wheat harvest this year.
“While the world wheat crop is also expected to be a record this fall, crop quality will be poor in the United States, Russia, France and Ukraine, boosting premiums for high-protein bread wheat,” Scotiabank said. “Excessive moisture will also take a toll on Western Canada’s wheat quality, but carryover volumes of higher-wheat from 201314 will add to Prairie farm income this year.”
On the mineral side, potash prices were up slightly, while uranium prices have hit bottom and are moving upward, Scotiabank said.
Spot market potash prices were at US$310 per ton in August, up only slightly from the January low of US$295 for standard-grade potash. However, Uralkali, which caused potash prices to plummet when it left the Eastern European potash cartel BPC last July, has increased granular prices in Brazil and across Latin America to US$380 per ton.
Uralkali also intends to boost contract prices to China by 10 per cent in the first half of 2015. As a result, China will exercise its options on Canpotex volumes, eager to purchase more tonnage before prices move up.
Canpotex — the overseas sales agent of Potash Corp, Agrium and Mosaic — is effectively soldout over the balance of 2014, Scotiabank said.
Record deliveries
Global potash deliveries were at record levels in the first half of 2014 and will likely increase by eight per cent to nearly 59 million tons in 2014. Canpotex producers have the bulk of the surplus capacity available for world markets. As a result, Potash Corp is recalling staff at previously curtailed operations in its Canadian mines and will consider raising its production to 10.5 million to 11 million tons in 2015 from 9.2 million tons this year.
Patricia Mohr, Scotiabank’s commodity specialist, said Potash Corp hopes to increase production now in the expectation of higher prices later. “They would like to have the volume gains, rather than substantially higher prices.”
Spot uranium prices have also lifted decisively off a US$28.25 per pound low in June to US$36.50 in mid September.
“Improving market sentiment reflects prospects for two nuclear reactor re-starts in Japan, more active midterm utility demand and production deferrals and curtailments,” Scotiabank said.

Uralkali’s CFO Resigns #potash

Uralkali Announces Senior Management Change

29.09.2014

http://www.uralkali.com/press_center/company_news/item29092014/

Uralkali (LSE: URKA; the Company), one of the world’s largest potash producers, announces that Viktor Belyakov has resigned from his position as Chief Financial Officer of the Company.

Anton Vishanenko will act as the interim CFO until the next Board of Directors meeting scheduled for the end of October when the Board will consider his appointment as the permanent CFO. Viktor Belyakov will advise the interim CFO in order to ensure an effective and smooth transition of responsibilities.

Anton Vishanenko has extensive financial experience in the role of Chief Financial Officer at several major Russian companies, including Mechel, UralChem and Novorossiysk Commercial Sea Port. He holds an Executive MBA from INSEAD, and is a member of ACCA and CPA.

Dmitry Osipov, Uralkali CEO, commented: “In his 12 years at Uralkali, Viktor Belyakov has played an instrumental role in the Company’s continued growth. He helped steer the business through key milestones, including Uralkali’s IPO in 2007, the transformative merger with Silvinit in 2011 and the subsequent integration. He also capably led the Company as acting CEO during September-December 2013. We are grateful to Viktor for his excellent work and wish him the very best in his future endeavours”.

Uralkali (www.uralkali.com) is one of the world’s largest potash producers and exporters. The Company’s assets consist of 5 mines and 7 ore-treatment mills situated in the towns of Berezniki and Solikamsk (Perm Region, Russia). Uralkali employs ca.11,300 people (in the main production unit). Uralkali’s shares and GDRs are traded on the Moscow Exchange and London Stock Exchange, respectively.

New Yara CEO quits before he starts after merger talks announcement #potash

New Yara CEO quits before he starts after merger talks announcement
Fri Sep 26, 2014 8:41am EDT
By Balazs Koranyi and Joachim Dagenborg
OSLO, Sept 26 (Reuters) – Fertiliser maker Yara’s new chief executive, who was to start in February, quit on Friday just days after the firm announced it was in merger talk with rival CF Industries to create a $27 billion company.
Svein Richard Brandtzaeg, who announced in July that he would take the helm at the world’s biggest nitrate fertiliser maker, said he will stay on as CEO of aluminium producer Norsk Hydro, where he has worked for the past 29 years.
“The most important precondition for me to join Yara is no longer in place,” Brandtzaeg told Reuters. “I was informed about the merger talks just before the media was.”
“I did not know about merger talks when I agreed with Yara in July and I am not obliged to take the CEO position of Yara under such circumstances,” Brandtzaeg added.
Yara and Chicago-based CF Industries announced this week that they were in early stage talks about a merger of equals that would create a rival in size to world number one fertilizer producer Potash Corp of Saskatchewan.
Yara said Joergen Ole Haslestad would continue as interim CEO and it would relaunch its search for a new chief.
“The (merger) talks are at an early stage and it is important to emphasize that they are based on a common understanding that any merger will create significant value,” Yara Chairman Leif Teksum told Reuters.
Besides the search for a new CEO, the merger faces other hurdles. The Norwegian state owns 36 percent of Yara and plans to keep at least 34 percent of the firm. It also insists that the headquarters must remain in Oslo.
“We continue to believe this potential merger is not a done deal, notably given the Norwegian government ownership,” Deutsche Bank analysts wrote in a research note.
Even if the government wanted to change its stance, it rules in a minority and its opposition has already said it will not compromise.
Teksum said he was “very familiar” with the government’s stance and intentions with Yara.
Norne Securities analyst Tomas Skeivys said Brandtzaeg’s resignation could suggest the merger talks are further along than the companies acknowledge.
“If the reason for Brandtzaeg’s departure is that this is part of the negotiations about who gets the CEO position, given that the headquarters has to be in Norway, then it might suggest that the merger talks are at a more advanced stage than what they have led us to believe,” he said.
A GOOD MATCH
From a business perspective, Yara and CF are a good match with few overlaps and a lot of complementary operations, analysts have said.
CF is focused on production and operates mainly in the United States while Yara has a better position in more complex products, blending and distribution, helped by a sales network in 150 countries.
The deal would give CF access to a vast global distribution network while Yara would gain access to cheap U.S. gas, the top ingredient in fertilisers.
At Hydro, Brandtzaeg established a reputation as a top manager, guiding the firm through one of the industry’s most turbulent times and leading it into the current upswing with a top flight balance sheet.
The benchmark aluminium price on the London Metal Exchange has risen about 10 percent so far this year on expectations that the market will swing into deficit this year after many years of overproduction and surpluses.
“Fundamentally, the market balance looks more promising than what we have seen for quite a long time,” Brandtzaeg said.
Shares of Hydro, also a hydro-electric power producer, are up 38 percent over the past year, outperforming the Oslo benchmark’s 18 percent rise.
Hydro shares traded flat on the Oslo bourse while Yara was down 1 percent. (Additional reporting by Ole Petter Skonnord; Editing by Edwina Gibbs and Susan Thomas)

Moscow moves to seize oligarch’s oil firm, raising fears of wider intervention #potash

Moscow moves to seize oligarch’s oil firm, raising fears of wider intervention

MARIA KISELYOVA

MOSCOW — Reuters

Published Friday, Sep. 26 2014, 9:21 AM EDT

Last updated Friday, Sep. 26 2014, 9:23 AM EDT

 

Russia moved to wrest control of an oil company from oligarch Vladimir Yevtushenkov on Friday, seizing his conglomerate Sistema’s shares in the firm and deepening investors’ fears the Kremlin wants to reclaim prized state assets.

A Moscow court ordered the seizure of Sistema’s stake in Bashneft a day after a judge refused to release Yevtushenkov, who is under house arrest on suspicion of money laundering during the oil firm’s acquisition in 2009.

The case has raised fears among investors that President Vladimir Putin, who favors what is known as “state capitalism,” wants to increase intervention in the economy as Russia tries to cope with Western sanctions imposed over the Ukraine crisis.

Although Yevtushenkov has kept out of politics, the case has drawn comparisons with the fate of Mikhail Khodorkovsky, the former chief executive of the Yukos oil firm who was jailed on fraud and tax evasion charges a decade ago after falling out with Putin.

“They [officials] are telling themselves, to ease their conscience, that they are doing a high-minded thing by returning it to state ownership,” Sergei Petrov, an opposition deputy, told Reuters this week. “The channel is already known, the method has been tested … as it was last time with Yukos.”

Khodorkovsky was freed last year but Yukos, which was once worth $40-billion, was broken up and nationalized with most of its assets eventually handed to Rosneft, an energy giant run by a Putin ally.

Sistema acquired an almost 80 per cent stake in Bashneft from local authorities in the Ural mountains region of Bashkortostan for $2.5-billion and the oil producer has since been showing one of the sector’s fastest rates of output growth. It is Russia’s sixth-largest oil company by production.

The deal is being challenged by the Russian prosecutor-general’s office, which said it had uncovered “significant violations” of the law and was acting to end the “illegal possession” of Bashneft and restore it to federal ownership.

It said the Moscow arbitration court had granted its request to seize the shares as an interim measure and the court said it would hold a hearing on the lawsuit on Oct. 9.

Shares in both Sistema and Bashneft fell further in early trade on Friday. Moscow-traded shares in Sistema lost almost 18 per cent by 9:15 (GMT), leaving them down more than 50 per cent since Yevtushenkov was placed under house arrest. Bashneft’s stock price was down around 8 per cent.

Russia’s problems were also compounded by concerns about frayed relations with Ukraine, with the rouble hitting an all-time low against the dollar at 38.97.

Fears that Russia could demand immediate repayment of a $3-billion debt owed by Ukraine also hit Kiev, pushing up the cost of insuring some Ukrainian debt to seven-month highs.

Yevtushenkov, who was 66 on Thursday, never seemed the sort of person likely to become a target of such intrigue. He had no apparent political ambitions of his own, and built up his telecoms-to-oil empire quietly from the 1990s.

Sistema groups 15 business sectors ranging from oil to Detsky Mir, a retailer of toys and children’s clothes, and Yevtushenkov became known in the business community for running an efficient, if unwieldy, conglomerate. He was put under house arrest on Sept. 16 and a court ruled on Thursday that this should continue until Nov. 16.

Sistema has been unable to deal in its Bashneft shares since at least July because of a related investigation. It has denied the accusations against Yevtushenkov, though it and Bashneft declined comment on Friday.

Putin has propagated “state capitalism” in his third term as president, which began in 2012, pushing for wider government control over important sectors of the economy such as energy, which contributes about half of federal budget revenues.

Putin’s ally Igor Sechin, head of state-controlled Rosneft , increased the state’s share in the oil industry to more than 50 per cent when the company bought Anglo-Russian firm TNK-BP for $55-billion last year.

Rosneft has denied it plans to buy Bashneft, despite widespread media reports that it wants to do so.

Yevtushenkov’s house arrest shocked the Russian business community and foreign investors, prompting Economy Minister Alexei Ulyukayev to suggest last week it had damaged the business climate and could spur capital flight.

Russian business leaders back Putin over the Ukraine crisis, in which Moscow has annexed the Crimean peninsula and is accused by the West of directly supporting armed pro-Russian separatists in east Ukraine – charges the Kremlin denies.

But many businessmen fret over the direction the economy is taking and regret the country’s growing isolation.

CHART: BHP before and after spin-off #potash

CHART: BHP before and after spin-off

Frik Els

September 25, 2014

http://www.mining.com/chart-bhp-before-and-after-spin-off-65974/

 

BHP Billiton announced in August a plan to create an independent metals and mining company based on a selection of its aluminium, coal, manganese, nickel and silver assets.

This chart from the Melbourne-based company’s 2014 annual report shows just how much the structure of BHP Billiton has changed since 2005, with iron ore, and oil and gas playing a dominant role and potash set to become a significant contributor in the future.

BHP before and after split

 

Once more Karnalyte Resources shuffles CEO #potash

Once more Karnalyte Resources shuffles CEO
By: Henry Lazenby
24th September 2014
TORONTO (miningweekly.com) – Saskatchewan-focused potash project developer Karnalyte Resources on Wednesday announced a second change in top management this year, adding that it had launched a search for a permanent president and CEO, which it expected to appoint in the next two months.
TSX-listed Karnalyte, which is looking for cash to build its flagship Wynyard carnallite project, reported that chairperson Bruce Townsend would immediately replace Thomas Drolet as president and CEO.
Karnalyte only last month made Drolet’s title as CEO permanent, dropping his acting status. He replaced company founder Robin Phinney in May, following Phinney’s abrupt departure.
Drolet had also resigned from the board and Jay Sujir of Vancouver was appointed in his place with immediate effect. Sujir is a corporate, securities and natural resources lawyer with experience in advising and assisting public companies in Canada.
Last week, Stonegate Agricom, which was developing a phosphate mine in Idaho, announced that CEO Mark Ashcroft had resigned, with co-chairpersons Ian McDonald and Kerry Knoll taking over CEO duties on an interim basis.
Earlier this month, Arianne Phosphate, which was developing the Lac a Paul phosphate/titanium deposit, in Quebec, said Brian Kenny had resigned as CEO, but would stay on as a consultant to cut capital and operating spending, with executive chairperson Pierre Fitzgibbon taking over the job of finding a strategic partner or investor to buy the company.

PotashCorp sees good sense in BHP’s fertiliser go-slow #potash

Potash Corp sees good sense in BHP’s fertiliser go-slow

  • by: BARRY FITZGERALD
  • From: The Australian
  • September 25, 2014 12:00AM

 

CANADA’S leading potash producer Potash Corp says there is good reasoning behind BHP Billiton’s decision to go slow on its push in to the global fertiliser industry with the development of its Jansen project in Saskatchewan.

It comes down to Potash Corp — the group BHP tried to take over in 2010 for $40 billion — and its fellow producers already having the capacity to cover what growth there will be in the market until around 2020, effectively locking out Jansen.

Potash Corp chief financial officer Wayne Brownlee told a fertiliser conference in Toronto this week that there would not be any meaningful supply additions from outside of the Canpotex marketing arm used by Potash Corp, Mosiac and Agrium over the next three years, probably drifting “up close to 2020’’.

Under its original planning, Jansen was meant to be in production next year. But based on its own assessment of market demand, BHP said last year it could take to the “decade beyond 2020’’ before Jansen was ramping up to design capacity.

The broad agreement between BHP and its Canadian competitors that Jansen’s market opening is around 2020 is in keeping with BHP’s decision to modulate the rate at which it spends the $US2.6bn ($2.9bn) it has committed to at least finish the excavation and lining of the production shafts to gain access to the deeply buried resource.

BHP chief executive Andrew Mackenzie refers to Jansen as a potential “fifth pillar’’ for the company alongside iron ore, petroleum, copper and coal.

Last month he was quizzed by on the timing at Jansen. “We are taking this very slowly,” he said. “We want to do it right, in terms of the technology for developing the shaft, which is the most difficult part.

A deal to rival PotashCorp’s power #potash

Sep 2014
National Post – (Latest Edition)
By Peter Koven
Financial Post pkoven@nationalpost.com Twitter.com/peterkoven
A deal to rival Potash’s power
CF, Yara tie-up would create fertilizer giant
Yara CF
A potential combination of the world’s two biggest nitrogen producers threatens to break up the established order in the fertilizer industry and create a new dominant player to match Potash Corp. of Saskatchewan Inc.
U.S. producer CF Industries Holdings Inc. and Norwegian firm Yara International ASA announced Tuesday they are in early negotiations to combine to form a US$27-billion giant. It would be the untouchable leader of the nitrogen fertilizer sector, with more than four times as much ammonia production capacity as the next largest rival.
“We’ve had a slew of M&A on the nitrogen side in the last four or five years, but it would be the crowning achievement if these guys get together,” said Spencer Churchill, an analyst at Paradigm Capital. “Because they would be just a dominant force.”
The proposed “merger of equals” got an immediate thumbs-up from investors and analysts, as the two companies appear to be a sensible fit. CF is the dominant producer in the United States, while Yara is a big player in other countries and has a broad distribution network that CF can access. There are possible tax synergies for CF shareholders if the combined company is headquartered outside the U.S. And Yara would benefit from the low natural gas prices CF enjoys in North America.
Nitrogen prices have held up better than potash prices in recent years. As a result, there is speculation a combined CF-Yara could become the flagship investment in the sector, unseating Potash Corp.
The merger talks come amid falling grain prices, which have spurred talk about consolidation in the fertilizer space. However, experts do not anticipate any other megadeals like this one, as the industry is already highly consolidated at the top. More likely, there will be a series of smaller, tuck-in acquisitions.
Speaking at a Scotiabank conference in Toronto on Tuesday, Agrium Inc. chief executive Chuck Magro said it was almost impossible to buy assets a couple of years ago, when grain prices were much higher and “every company was making an awful lot of money.” But now that the market has cooled, he thinks there will be plenty of opportunities.
“I think we’re heading into a period where we’re going to see a lot of interesting M&A activity and consolidation in the space,” he said.
Calgar y-based Agrium tried to buy CF in 2009, but ultimately gave up after a prolonged takeover battle. If the CF-Yara deal does happen, it will be a game-changer for the entire nitrogen industry.
Nitrogen is a far more fragmented sector than potash, and a lot of investors worry about oversupply as numerous players try to ramp up production in North America. A big transaction like this could erase some of those concerns. Both Yara and CF have been trying to expand output, but they may be more selective if they work together, experts said. And by merging with Yara, CF would have an easier time selling nitrogen outside North America if there is an oversupply situation.
“I think if you put the two together, you get a more rational producer,” Mr. Churchill said.
While the deal is tantalizing to investors, experts warned there are a lot of headwinds that could prevent it from happening: the Norwegian government owns 36.2% of Yara, there are potential antitrust issues, and the U.S. is cracking down on tax inversions.

Russia’s Uralkali sees flat H1 potash supply to China #potash

Russia’s Uralkali sees flat H1 potash supply to China

By Polina Devitt and Andrey Kuzmin

MOSCOW Tue Sep 23, 2014 5:59am EDT

 

MOSCOW (Reuters) – Russia’s Uralkali (URKA.MM), the world’s largest potash producer, expects volumes to China to remain flat or rise slightly in the first half of 2015, the company’s head of sales told Reuters.

The company hopes to increase the price in the new contract by 10 percent from the $305 per ton on a cost-and-freight (CFR) basis of the previous contracts, Oleg Petrov said in an interview at the Reuters Russia Investment Summit.

China is the world’s largest consumer of the crop nutrient, and its contracts are seen as a benchmark by most participants in the market. Potash prices are gradually recovering after Uralkali broke a powerful trading alliance with Belarus in 2013.

“The pace of market recovery has exceeded our expectations,” Petrov said. Negotiations over the new contract with China for the first half of 2015 are expected to start in October and to end by January.

“We expect a price rise on contract markets – in China and India; spot market reaction will depend on many factors,” Petrov said at the summit, held at the Reuters office in Moscow.

Uralkali’s contract with India lasts until February.

Uralkali quit the trading alliance with Belarus in July last year to focus on maximizing sales volumes, triggering a slump in global potash prices. Before the collapse of the alliance Uralkali was supplying potash to China at $400 per ton.

Since it started trading on its own, the company has regained its export market share of 23 percent and refocused its strategy on maximizing revenue.

Asked whether the company would want to cooperate with privately-held Russian fertilizer maker Eurochem, which starts its own potash production in Russia in 2017, he said that he sees “potential for cooperation in terms of trading”. Petrov did not elaborate.

Global potash deliveries are expected to rise by 1-2 million tonnes from this year’s 59 million tonnes, Petrov added. The company sees its own output flat in 2015. In 2014, it plans to produce between 11.5 million and 12 million tonnes.

Follow Reuters Summits on Twitter @Reuters_Summits

(Reporting by Polina Devitt, Andrey Kuzmin, Natalia Shurmina, Alessandra Prentice and Elizabeth Piper; Editing by Michael Urquhart)

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