Fertilizer Markets and Finance

* Sells 1.1 mln tonnes through 2013 at $427/tonne

    * Similar to India deal with BPC

    By Rod Nickel

    Feb 7 (Reuters) - Canpotex Ltd, the offshore selling agency

for leading North American potash miners, has signed a new

potash supply contract with Indian buyers at a smaller than

expected discount.

    The deal to supply India with the crop nutrient for the

remainder of 2013 ends a long standoff by Indian buyers that

dented profits for producers like Potash Corp of Saskatchewan

Inc, one of the miners represented by Canpotex. The

standoff caused North American supplies to pile higher than

normal.

    Canpotex also represents Mosaic Co and Agrium Inc

.

    Shares of Potash Corp, which supplies nearly half of

Canpotex’s potash, were up slightly in early afternoon trading

and Agrium stock was also slightly higher. Mosaic was a little

lower.

    Canpotex said on Thursday it will sell about 1.1 million

tonnes of the crop nutrient to Indian buyers up to January 2014

at a price of $427 per tonne, including costs and freight. The

deal is similar to one announced a day earlier by Canpotex rival

Belarussian Potash Co (BPC), which will sell 1 million tonnes of

potash to Indian buyers at the same time.

Read more at Reuters

By G C Mays

As expected, Potash Corporation (POT) reported disappointing Q4 and full-year earnings. Revenues, which are usually light in Q4, were down nearly 12% year over year after rising almost 3% a year earlier. For the full year, gross sales tumbled 9% to $7.9 billion. Tons sold were down across the board, but faltering potash sales takes the lion’s share of the blame. Sales were down for both phosphate and potash, while the nitrogen business managed to post a modest increase due to firm pricing throughout the year.

Potash

While stalled international contract negotiations did play a significant role in slumping potash sales during 2012, tons sold were down across the board in both North American and offshore markets year over year. At an average selling price of $396 per ton, offshore pricing rose 5.6% compared to a year ago, while prices in North America fell a modest 1.5% to $475 per ton. Attempting to extract higher prices from a price-sensitive customer will limit tons sold every time.

Read more at Seeking Alpha

Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc. have settled U.S. antitrust lawsuits that accused them of artificially inflating potash prices.

Potash and Mosaic paid $43.75 million each while Agrium paid $10 million to settle the cases brought by U.S. buyers in 2008, the companies said in separate statements on Wednesday.

Russian group JSC Uralkali, the world’s second-largest potash producer by capacity after Canada’s Potash Corp., agreed in September to settle the cases for $12.75 million.

Three more companies from Russia and Belarus — JSC Silvinit, JSC International Potash and JSC Belarusian Potash — were also named in the lawsuits in 2008. Uralkali and Silvinit merged in 2011.

The defendants accounted for about 71 percent of global potash supply in 2008. The United States consumed 6.2 million tons of potash that year, of which 5.3 million was imported.

The settlement is subject to final approval of the U.S. District Court for the Northern District of Illinois.

Potash Corp. said it decided to settle after weighing the multiyear financial cost to defend the allegations.

Read more at The Chicago Tribune

Potash Corp.’s nitrogen and phosphate processing facility in Geismar, La., is shown in a 2010 photo.(Derick E. Hingle/Bloomberg / January 30, 2013)

By G.C. Mays

When Israel Chemicals (ICL) inked their own potash deal with China recently it became clearer why Potash Corp (POT) went from wanting to increase its stake from 14 percent to wanting to acquire the fertilizer company. An acquisition would give them a new geographic point of distribution into China for Potash Corp as well as a reliable source of revenue for Sinofert Holdings Ltd, another strategic investment.

It is unclear if the deal, which is for the sale of 660,000 tons of potash during the first half of 2013, is with Sinofert. Sinofert is China’s largest importer and distributor of fertilizer. This agreement is part of a larger 3 year, 3.3 million ton agreement. According to Israel Chemicals, the sale price per ton is in the neighborhood of the $400 price Canpotex negotiated at the end of December on behalf of its three members.

This deal happens while Potash Corp waits on election results in Israel. Available results show that the greatest number of seats in the Knesset, which is Israel’s legislative branch, will go to Netanyahu’s party. Potash Corp recently abandoned a bid to increase its stake in Israel Chemicals in June.

Read more at Seeking Alpha

The contract reached between Sinofert Holdings (HKEX:0297) and Canpotex, the potash export arm of Potash Corporation of Saskatchewan (TSX:POT,NYSE:POT), Mosaic (NYSE:MOS) and Agrium (TSX:AGU,NYSE:AGU), will see 1 million tonnes of potash exchange hands in the first half of 2013.

The price of the contract, which The Globe and Mail reported is about $400/tonne, represents a decline of $70/tonne from the previous contract signed between Canpotex and China. The agreement is expected to set the tone for other deals signed through contracts and spot-price purchases.

Depressed 2012 fertilizer demand from India and China is a key component of the price decline.

Southeast Asia saw the biggest decline in potash demand in 2012, with a 1.9-million-tonne, or 20.2-percent, fall off compared to 2011, according to data collected by the Financial Times.

India saw the biggest proportional decline, with a reduction of 34.8 percent, or 1.6 million tonnes, in 2012. The drop came on the back of a devaluation of the country’s currency and the return of government subsidies for fertilizers.

India is the next big customer in line to ink a deal with Canpotex, but when that contract will be settled is currently anyone’s guess. The country is completely dependent on foreign supplies of potash, but does make use of alternative products, principally urea; it last signed a contract in August 2011, according to The Globe and Mail.

Read more at Potash investing News

By Kaustubh Kulkarni and Rod Nickel

MUMBAI/WINNIPEG, Manitoba | Fri Jan 18, 2013 12:41am IST

(Reuters) - India has enough potash in reserve to delay its purchases of the key crop nutrient well into the second quarter of this year, putting new pressures on North America’s big fertilizer producers at a time of high inventories and stiff competition.

Indian sources say the country, one of the world’s top potash importers, has stocks to last farmers into late spring, pushing out the likely date when they would need to buy more from Canpotex Ltd, which makes export sales on behalf of leading North American producers Potash Corporation of Saskatchewan, Mosaic Co and Agrium Inc.

That would be bad news for the fertilizer giants, whose profits have suffered. Their analysts still expect an Indian deal by March. Potash Corp, the world’s biggest producer by capacity, has idled four of its mines in recent months, and would likely have to extend the cutbacks if India is absent much longer.

India and China have long bought potash through contracts, rather than on the spot market from the big producers, and usually at market-low prices. China signed its most recent deal in December, ending a long holdout, and India last inked a contract in August 2011.

The Chinese contract gives Indian buyers a clear idea of the terms they can negotiate, and any talk of delay may partly be a negotiating ploy, said Mark Gulley, an analyst for BGC Financial LP in New York.

Read more at Reuters

Back in 2010, global mining giant BHP Billiton was aching to buy Canadian fertilizer producer Potash Corp. And the Chinese government was apparently fretting about the rise of potash prices after the deal, which ultimately failed.

That all fitted neatly into what Asia watchers call the “China and India will eat the world” theory. This widespread view, a favorite of commodities bulls, holds that demand can only ever go up because China’s and India’s huge populations are getting richer and consuming more things. Commodities investor Jim Rogers is a key proponent of this.

But fast forward to today and BHP Billiton, which launched a gigantic project to produce the potassium-salt-based fertilizer by itself after its failed bid for Potash Corp, may now put the project on hold according to the Wall Street Journal. The reason: falling demand. The price of potash has slumped in the last quarter after rising rapidly throughout 2007-2009. Mosaic, a Canadian producer, has just issued results showing a 16% revenue drop in the last quarter on the same time last year.

Potash’s problem is that while Chinese food consumption has definitely increased over the last two decades and Indians are eating more meat, their farmers remain less interested in using good quality fertilizer than their Western counterparts. Potash is touted as a superior soil booster. But there are cheaper alternatives, such as urea, that Indian farmers turned to when potash prices were skyrocketing. As well as exploring alternative fertilizers, China has long worked on growing its own potash industry, which could increase global supplies and hurt international potash firms.

Read more at Quartz

Potash Corp., a Canadian company, held talks in October with the Israeli government about raising its stake in Israel’s second-largest company by market value from the current 13.84 percent. The deal “is not yet under serious discussion” as Israel prepares for general elections on Jan. 22, Yuval Steinitz said in an interview.

“It will take a few months before we can really discuss it,” Steinitz, 54, said from Bloomberg’s headquarters in New York. “There are different opinions, but anyhow, I think the next government will have to consider it, if necessary.”

Israel Chemicals employees declared a work dispute in December after Prime Minister Benjamin Netanyahu met in October with Potash Chief Executive Officer Bill Doyle about the proposed deal. The Israeli government can block takeover bids by using its so-called golden share, allowing the state to prevent a takeover to protect natural resources.

“Two things will be taken into account: the needs and interest of the Israeli company, and more particularly, the interests of the Negev, employment and economic development in the Negev,” Steinitz said. The Negev is the southern region of Israel, including the Dead Sea, from which Israel Chemicals extracts minerals to make fertilizer and potash.

Read more at Bloomberg Businessweek

DENVER, Jan. 8, 2013 /PRNewswire/ — Prospect Global Resources, Inc. (NASDAQ: PGRX) today stated that recently announced potash pricing of $400 per metric ton for shipments to industrial companies in Asia in the first half of 2013 validates the Company’s operating model and the value of the 10-year offtake agreement that it signed last fall with a major Chinese buyer.

In its Preliminary Economic Assessment of December, 2011, Prospect Global projected operating expenses of approximately $98 per metric ton of potash extracted. An updated Cost Feasibility Study on October 18, 2012, stated that operating expenses remained comfortably within confidence levels set by the December, 2011, preliminary economic assessment. At current pricing, such expenses would create significant operating margins, the Company said.

“Recent global potash prices further validate the cost infrastructure of Prospect Global’s operations,” Chief Executive Officer Patrick L. Avery said.

On October 22, 2012, Prospect Global and Sichuan Chemical Industry Holding (Group) Co., Ltd. of Chengdu, China, jointly announced a more than $2-billion, 10-year agreement under which Sichuan will purchase at least 500,000 metric tons of potash annually, or 25% of the projected output of Prospect Global’s American West Potash field in Holbrook, AZ.

“At current market levels, the long-term arrangement with Sichuan would yield attractive returns,” Mr. Avery said.

Sichuan Chemical is a state-owned enterprise that is China’s third-largest chemical company and one of its largest fertilizer manufacturers.

http://www.prnewswire.com/news-releases/potash-price-of-400-per-metric-ton-validates-prospect-global-resources-china-contract-186076482.html

The FEDERAL ASAHI docked at the Port of Wilmington to discharge potash. Photo by Susan N. Pridgen

A small Alberta company is readying a deal with a major Asian partner to help finance a potash mine in Saskatchewan, positioning itself to become one of the first new producers of the crop nutrient in Canada in years.

According to sources familiar with the situation, Karnalyte Resources Inc.is expected to ink a $45-million agreement this week that will see the small Okotoks, Alta.-based company sell a 19.98-per-cent stake for $8.15 a share.

The buyer, believed to be either a Chinese or Indian company, has also committed to a subsequent equity injection of $15-million over the next year or so and will buy potash from Karnalyte at market prices for 20 years once production begins.

The dollars involved in the deal are small, but the significance to the industry is great. The deal underscores the growing push by top consumers India and China to distance themselves from Canada’s Canpotex Ltd. and Russia’s BPC, producer groups that have long controlled most of the world’s supply amid strong profits.

Read more at The Globe and Mail

The future mine site for Karnalyte near Wynard, Sask., is shown in an Oct. 29, 2012, file photo. The Alberta company’s recent deal underscores the growing push by top consumers India and China to distance themselves from Canada’s Canpotex Ltd. and Russia’s BPC.

(DAVID STOBBE for The Globe and Mail)

FT.com > Markets > Commodities

Read the FT article on what fertilizer companies are hoping as China and Canpotex comes to a deal.

Canpotex Limited (Canpo-tex) has reached a deal with China’s Sinofert Holdings Limited to supply one million tonnes of potash in the first half of 2013.

The deal, in the neighbourhood of $400 per tonne, is $70 less per tonne than the last contract signed in March 2012.

Canpotex is the offshore marketing company owned by the three Saskatchewan potash-producing companies: Potash Corporation of Saskatchewan Inc., Mosaic Canada Crop Nutrition, LP, a subsidiary of The Mosaic Company; and Agrium Inc.

“We are very happy to see this agreement reached and to have it done early in the year,” said PotashCorp spokesperson Bill Johnson. “This agreement will help to provide some certainty for the market going forward.”

PotashCorp’s share of the sale is slightly less than 50 per cent, with Mosaic close to 40 per cent and Agrium about nine per cent.

Canpotex president and CEO Steven Dechka said in a news release the latest agreement “demonstrates the continued confidence Sinofert has in Canpotex’s ability to meet the growing needs for potash in the important China market.”

Sinofert is China’s largest integrated agricultural company and a long-term business partner of Canpotex.

Canpotex used to do annual contracts with China until about two years ago when they went to six-month contracts.

John Hughes, an analyst with Desjardins Securities, said the market seems to be reacting positively to the news.

“On a net basis it is a small positive to have China actually active in the market and indicating they need more, not less, in terms of nutrient for 2013,” Hughes said.

Read more at The Star Phoenix

anada’s potash cartel has blinked in negotiations with one of its biggest buyers, making a significant cut to the price of its fertilizer ingredient, after China ended its so-called potash holiday.

Canpotex Ltd. has struck a deal to sell one million tonnes of potash to China’s Sinofert Holdings Ltd., but at a much lower price than last March. Canpotex, the offshore marketing company controlled by Potash Corp. of Saskatchewan Inc., Agrium Inc., and Mosaic Co., said on Monday that the new contract’s per-tonne price is $70 (U.S.) less than its last Chinese deal, reached in March. One analyst believes this is a 15-per-cent drop.

The deal ended a negotiating stalemate, when China and India took a “potash holiday” – sitting on the sidelines in part because of high prices. Canpotex’s owners enjoyed high prices for potash prior to 2012, and this may have hurt them in the last round of talks. Negotiations with India are still under way.

“The drop in price was significant but we have to get the volume back in global demand,” Rick McLellan, a senior vice-president at Mosaic, said in an interview. “The volume clearly offsets the price in this case.

“The Chinese are very good negotiators and always have been,” he said. “And they are very good customers.”

Read more at The Globe and Mail

Federal regulators have given conditional approval to a plan by Canpotex and the Prince Rupert Port Authority (PRPA) to construct a potash export terminal and associated transportation infrastructure.

Canpotex is proposing to construct and operate the terminal and the PRPA is proposing to construct the enabling transportation infrastructure and utilities, which is called the Ridley Island Road, Rail, and Utility Corridor.

Both projects will be located on Ridley Island in the Port of Prince Rupert on B.C.’s northern coast.

Environment Minister Peter Kent recently announced the proposed Canpotex Potash Terminal Project is not likely to cause significant adverse environmental effects with the implementation of mitigation measures and a follow-up program.

The terminal will include the following components:

marine wharf, access trestle, causeway and all weather ship loading facility capable of receiving vessels of up to 180,000 dead weight tonne;

180,000 tonne potash storage building with associated conveyor and dust collection systems;

automated railcar unloading and conveyor system, automated portal scraper and dust collection system;

settlement pond for storm water and wash down water, marine outfalls;

Read more at Journal of Commerce

The proposed Canpotex potash export terminal in Prince Rupert has been given the go ahead from the Canadian Environment Minister.

In a statement released today, Minister Peter Kent announced that he found the proposed potash export terminal and road and rail utility corridor planned for Ridley Island “is not likely to cause significant adverse environmental effects” based on the mitigation measures and the follow-up measures outlined in the Comprehensive Study Report filed by Canpotex.

The terminal calls for dock and marine infrastructure to receive 180,000 tonne vessels, a 180,000 tonne potash storage building with conveyor and dust collection system, an automated railcar unloading and conveyor system and buildings for administration, maintenance, personnel in addition to site services like water and hydro.

Included in the study is the rail/utility corridor proposed by the Prince Rupert Port Authority. That project includes an eight to 8.5 kilometre rail loop to handle up to 14 inbound and 11 outbound track on Ridley Island, a 3.4 kilometre 69 kV transmission line connected to the BC Hydro grid and an access road with a rail overpass and underpass.

In making the decision, the Minister took into account the documentation prepared by Canpotex and feedback from the public. The matter has now been referred to the DFO, Transport Canada and Environment Canada for the needed permitting.

Look for more information as it becomes available here at thenorthernview.com.

This image from the September 2012 Comprehensive Study Report shows the area proposed for the Canpotex potash terminal and the Ridley Island road and rail utility corridor.