K+S likely to sell Canada potash outside Canpotex

Tue Jun 19, 2012 6:53pm EDT
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By Rod Nickel

MOOSE JAW, Saskatchewan (Reuters) - Europe's top potash supplier, Germany's K+S AG (SDFGn.DE: Quote), is unlikely to join the Canadian export consortium Canpotex once it opens its Saskatchewan potash mine, but will follow that company's practice of moderating production to support prices, chairman Norbert Steiner said in an interview with Reuters.

K+S broke ground on Tuesday northwest of Regina, Saskatchewan on a C$3.25 billion ($3.16 billion) mine that will eventually produce 2.86 million tons annually of the crop nutrient, with first production set for late 2015.

K+S is bound by European anti-trust laws that make it unlikely to join Canpotex, which is jointly owned by No. 1 global fertilizer maker, Potash Corporation of Saskatchewan (POT.TO: Quote) (POT.N: Quote), Mosaic Co (MOS.N: Quote) and Agrium Inc (AGU.TO: Quote) (AGU.N: Quote), Steiner said.

"I'm really skeptical that we will be getting the allowance from the European anti-trust authorities to step into that," Steiner said in the small Canadian Prairie city of Moose Jaw, Saskatchewan, shortly after he turned the first shovel of hard, wet ground at K+S' rural mine site.

K+S, which is also the world's biggest salt producer, plans to ramp up to annual production of 2.86 million tons of potash from the Saskatchewan mine by 2023, with the first production expected in late 2015. It already produces between 7 million and 7.5 million tons of potash and potash specialty fertilizers annually from its German mines.

But even though it doesn't see a future with Canpotex, K+S has no appetite to chase market share by overproducing at the expense of price, and intends to gauge when to add further phases of construction by market conditions, Steiner said.

"Volume before price policy would be less successful," he said. "The established participants know how to do the business and we have no reason to deviate from that."

The K+S mine will become Western Canada's first new potash mine in nearly 40 years, barring delays. K+S could eventually expand the Saskatchewan mine to 4 million tons of capacity.   Continued...