UPDATE 2-Uralkali to delay potash expansion if BHP mine proceeds

Wed May 22, 2013 1:06pm EDT
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By Rod Nickel

WINNIPEG, Manitoba May 22 (Reuters) - Russia's Uralkali OAO would delay two of its potash mine expansion projects for as long as a decade if rival BHP Billiton builds the world's biggest mine of the crop nutrient, Uralkali's chief executive said in an interview.

Uralkali is aiming to become the largest global producer of potash by 2021, leapfrogging Canada's Potash Corporation of Saskatchewan in mining capacity.

But BHP's not-yet-final plan for a mine near Jansen, Saskatchewan, that would produce 8 million tonnes annually, would change the global supply and demand picture so dramatically that Uralkali would rein in its own expansion plans if BHP goes ahead, Chief Executive Vladislav Baumgertner said in an email exchange with Reuters this week.

"This uncertainty is mostly due to (the) BHP project," Baumgertner said. "If Jansen is developed, then we will postpone the realization of Solikamsk-3 expansion and Polovodovsky by five to 10 years."

Uralkali is the second major potash producer in a week to highlight BHP's decision as pivotal to its own expansion plans, as miners aim to avoid a glut of the pink or white crop nutrient, which is produced mainly in Canada and Russia.

U.S.-based producer Mosaic Co told Reuters last week that it would reconsider a decision to shelve its Canadian potash expansion if BHP scuttles Jansen.

The $1 billion Solikamsk-3 mine expansion would add 2 million tonnes of annual capacity, and the new Polovodovsky mine would cost an estimated $2.4 billion to build and increase Uralkali's capacity by 2.5 million tonnes. Uralkali has not yet completed feasibility studies on the projects.   Continued...