(Adds reaction of shares in North American producers, background, analyst’s comment)
MOSCOW, Nov 18 (Reuters) - Russia’s Uralkali OAO, the world’s largest potash producer by output, said on Tuesday it suspended work at its Solikamsk-2 mine over safety concerns, driving down its stock and boosting shares of its North American rivals.
The company said in a statement it launched an emergency plan and evacuated staff after high levels of brine inflow were detected at the mine in Russia’s Perm region.
The shutdown comes amid tight North American inventories of potash, due in part to production curbs. North American supplies of the nutrient used to fertilize crops were down 35 percent from the previous five-year average at the end of the third quarter, according to data from Potash Corp of Saskatchewan and International Plant Nutrition Institute.
“We haven’t had a scare on the supply side in a long time,” said Spencer Churchill, analyst at Paradigm Capital. “It’s been all about over-supply - nothing like this is priced in.”
Uralkali shares were down nearly 7 percent at 1532 GMT, underperforming a 0.6 percent rise on the Moscow index.
Investors bought stock in North American potash miners instead, driving up Potash Corp as much as 5.7 percent in morning trading in Toronto. Shares of Mosaic Co and Agrium Inc climbed by as much as 4.3 percent in New York and Toronto.
Uralkali’s other facilities, including a processing plant, were operating as normal, the company said. The Solikamsk-2 plant has annual output capacity of 2.3 million tonnes of potash, which accounts for about 3.5 percent of global capacity, Churchill said.
The company aims to produce between 11.5 million and 12 million tonnes of potash in 2014.
Uralkali declined to comment on how long the mine may be off-line.
“This is a big mine. Who knows how this will play out, and how significant this is, but if it would be lost ... it certainly is something that will get the market’s attention,” said Mike Rahm, Mosaic’s vice-president of market and strategic analysis.
Reporting by Polina Devitt; additional reporting by Rod Nickel in Winnipeg, Manitoba; editing by Gabriela Baczynska, Jason Neely and Gunna Dickson