(Reuters) - Weak conditions in the potash market will not improve any time soon, the chief executive of Potash Corp of Saskatchewan POT.TO said on Tuesday as the crop nutrient company announced it would suspend operations “indefinitely” at a Canadian mine.
Potash Corp said it was putting its Picadilly mine in the Canadian province of New Brunswick on care and maintenance, resulting in the loss of 420 to 430 jobs.
Potash prices have fallen sharply over the past year, under pressure from bloated capacity, soft grain prices and weak currencies in major consumers such as India and Brazil, one of Potash Corp’s largest customers.
“We don’t see in the short term how things will turn around quickly that would change the environment,” Chief Executive Jochen Tilk said in an interview.
“We are repositioning the company in light of that but we are still optimistic on the long term prospects for our business,” he said.
Potash Corp’s stock was 60 Canadian cents firmer at C$23.63 on the Toronto Stock Exchange on Tuesday. The stock is down 45 percent in the past 12 months.
As demand for potash has fallen worldwide, Potash Corp, the world’s biggest fertilizer company by capacity, has in recent months closed its Penobsquis potash mine in New Brunswick and suspended production at three mines in Saskatchewan.
Potash Corp, which had more than 5,000 employees worldwide at the end of 2014, said it would retain 35 employees at Picadilly to keep the operation in “care-and-maintenance” mode. About 100 affected employees could be relocated to Saskatchewan.
Potash Corp said it expected to recognize severance and transition costs of about $35 million in the first quarter as a result of suspending operations at Picadilly.
The suspension would help Potash Corp to reduce its full-year cost of goods sold by $40 million to $50 million and would eliminate capital expenditures of about $50 million in 2016 and $135 million in 2017-2018, the company said.
Reporting by Swetha Gopinath in Bengaluru and Nicole Mordant in Vancouver; Editing by Saumyadeb Chakrabarty, Robin Paxton and Marguerita Choy