* CEO says new Canadian mine on track
* “Speculation” on potash prices won’t spell end to venture
* Scraps forecast of higher 2013 operating profit
* Shares extend losses, trade 9.4 pct lower (Recasts lead, adds analyst comment, industry background)
By Ludwig Burger
FRANKFURT, Aug 6 (Reuters) - Shares in K+S tumbled to an almost seven-year low on Tuesday as the world’s fourth-largest potash miner stuck to an expansion project in Canada despite a widely expected slide in prices of the key fertiliser mineral.
Uralkali sent shockwaves through the potash industry last week by predicting a decline of more then 25 percent in the potash price to below $300 per tonne after it abandoned an export joint venture with Belaruskali.
Belaruskali partnered Uralkali for eight years in a venture that once held 43 percent of global potash exports. The end of that partnership heralds a price war for the crop nutrient.
“Our (Canadian) Legacy project is on track. We will not call this important venture into question in response to mere speculation,” K+S Chief Executive Norbert Steiner said in a statement on Tuesday.
Many analysts had expected K+S to further postpone or even suspend the planned C$4.1 billion ($3.9 billion) investment in the new Canadian mine.
K+S has said the Legacy project’s targeted premium on cost of capital of 15 percent would require a price of at least $420-$460 per tonne of potash, including freight.
In a research note issued before Tuesday’s statement, Nomura analysts said K+S’s closing share price on Monday of 17.33 euros implied that the market expected a potash price of $350 per tonne in the longer term.
Legacy has already experienced setbacks. In April, K+S warned that the venture would absorb a quarter more investment and that the start of production would be delayed by half a year until mid-2016.
Falling as much as 13 percent after the news on Tuesday, the shares traded 9.4 percent lower at 1333 GMT.
Berenberg Equity Research analyst John Klein said there was uncertainty in the market as to how K+S planned to fund some C$3 billion in outstanding expenditure for Legacy.
“The existing cash flow and the debt financing that has been lined up will not suffice to shoulder this,” he said.
The company has said it would use cash flow and unspecified debt to fund the investment.
K+S, which is also the world’s largest salt supplier, scrapped its forecast for slightly higher adjusted earnings before interest and tax in 2013, a move that Klein said was widely expected.
Since Uralkali’s remarks on July 30, K+S has lost more than 40 percent of its market value, while shares in Canada’s Potash Corp., the world’s biggest potash miner, have fallen 22 percent.
The German group is seen as hit particularly hard by any drop in potash prices.
At $280 per tonne, according to J.P. Morgan estimates, its German mines have some of the highest production costs in the world.
Furthermore, it cannot boost output to offset the effect of lower prices like larger rivals such as Potash Corp. or Uralkali because of capacity constraints at its German mines. ($1 = 1.0399 Canadian dollars) (Editing by Jane Merriman and Tom Pfeiffer)