- Potash Corp says price drop unlikely to shutter high-cost mines
By Rod Nickel
Sept 18 (Reuters) - A move by top global potash producer Uralkali to quit its export partnership and seek to maximize sales volumes is unlikely to weed out higher-cost producers, the chief financial officer of rival Potash Corp of Saskatchewan said on Wednesday.
Russia's Uralkali OAO broke up Belarusian Potash Co (BPC) in July and predicted the price of potash would plummet 25 percent to less than $300 per tonne.
If the idea was to drive prices low enough to force rivals to shed production capacity for the crop nutrient, it is not likely to work, said Potash Corp Chief Financial Officer Wayne Brownlee at the Credit Suisse Global Chemical and Ag Science conference in New York.
Companies with high-cost mines may operate in a negative cash-flow position temporarily, or idle mines until prices improve, but they are unlikely to abandon them, Brownlee said.
"If you underestimate the staying power of that capacity, then you're probably making a mistake."
Uralkali and Potash Corp are considered by analysts to be low-cost producers, while European mines operated by K+S AG and Israel Chemicals are at the high end, along with U.S.-based Intrepid Potash.
A spokeswoman for Uralkali could not be immediately reached for comment.
On Tuesday, Mosaic Co CEO Jim Prokopanko said Uralkali's revamped potash marketing plan fails the "economic sniff test." Continued...