Agrium to spend $1.5 billion to expand potash capacity
By Euan Rocha
TORONTO (Reuters) - Agrium's (AGU.TO: Quote) (AGU.N: Quote) board has signed off on a long-planned $1.5 billion project to expand potash production capacity by about 50 percent, aiming at capitalizing on demand for the crop nutrient.
Calgary, Alberta-based Agrium said on Wednesday the expansion of its operations at Vanscoy in the potash-rich Western Canadian province of Saskatchewan will cost less and take less time than building a potash mine from scratch.
"Our brownfield potash expansion will ultimately be much quicker to bring on, and significantly less expensive to develop, than any greenfield project that is under consideration," Chief Executive Mike Wilson said in a statement.
Agrium, a fertilizer producer as well as the largest farm products retailer in North America, also said it is quadrupling its semi-annual dividend to 22.5 cents a share from 5.5 cents a share.
"The increase in our dividend is a result of the continued growth in stable earnings from our retail business and the strength in our wholesale earnings profile and outlook," Wilson said.
Analysts were not surprised by Agrium's expansion announcement, but most cheered the company's move to raise its dividend payout, noting that it makes Agrium's dividend yield more competitive with that of its peers.
The company said the mine expansion will boost its potash output capacity to about 3 million tonnes a year at a cost of about $1,500 a tonne.
In terms of potash production volumes, Agrium is by far the smallest of the three potash producers in Saskatchewan. Its much Continued...