Fertilizer Markets and Finance

ESTERHAZY - More than 300 employees at Mosaic’s K2 potash mine near Esterhazy are waiting to return to the surface after a fire broke out Monday morning.

The fire was reported at 10:35 a.m. and has since been extinguished, but employees will remain in the mine until air quality checks can be completed.

No injuries have been reported and all 318 employees have been accounted for. It is expected all will be brought out by 9:00 p.m. Monday night.

There is no word on the cause of the fire, although a Mosaic spokesperson says it appears a piece of equipment was involved.

The incident is under investigation.

Esterhazy is around 360 km southeast of Saskatoon.

Over the past four decades, Canpotex has exported more than 180 million metric tons of Saskatchewan potash to 135 customers in 60 different countries.

The offshore marketing agency is owned by three of the province’s major potash producers: Agrium Inc., Potash Corp and The Mosaic Company. The sole focus of Canpotex is to market Saskatchewan potash to international markets.

Consistently ranked among Saskatchewan’s top revenueproducing companies, in 2011 Canpotex achieved sales revenues of $4.5 billion, up over $1.3 billion from 2010.

Company president and CEO Steve Dechka attributes 2011’s $1.3-billion gain in sales revenues to the strong recovery of the potash market. “The bottom fell out of the market in 2009. It was a record low year,” said Dechka. In 2009, global economic woes led to a 43 per cent drop in the demand for potash.

REGINA - A spokesman for BHP Billiton is dismissing suggestions from Down Under that a potash megaproject in Saskatchewan could be put on the backburner.

An Australian newspaper reported that the Jansen mine could be the most likely of BHP Billiton’s (NYSE:BHP) projects to face delay or reduced investment.

The Sydney Morning Herald said CEO Marius Kloppers recently told investment bankers that spending on planned construction could slow if market conditions worsen.

BHP spokesman Chris Ryder says the Jansen project east of Saskatoon is going full steam ahead.

Ryder, who is vice-president of external affairs, says talk of a delay was pure speculation.

“We actually made no statement around intentions,” he said. “Our CEO was simply going through some of the … characteristics of our major projects around the world and giving some insight into complexity of capital allocation.

“But there was no announcement, no change of intent with respect to Jansen. We’re driving hard towards first production from Jansen in 2015.”

The newspaper said Jansen was described as posing both the highest risk in technical terms while being “least compelling in market terms” for BHP. The story quotes unnamed analysts concluding that Jansen is probably the lowest priority of three megaprojects being undertaken by the Anglo-Australian mining giant.

Read more at Winnipeg Free Press

BHP Billiton plans to produce 16 million tonnes of potash per year from Saskatchewan, which would be shipped in its own railcars and marketed to its customers worldwide - not through Canpotex - the head of BHP’s operations in Canada said Thursday.

Tim Cutt, president of diamond and specialty products for the world’s largest mining company, confirmed BHP Billiton would rely on its own resources to market its potash production and not Canpotex, the offshore marketing organization for the country’s three largest potash producers - PotashCorp, Mosaic and Agrium.

“We will market (potash) through our marketing arm,” Cutt said in a question-and-answer session following his presentation to the Regina & District Chamber of Commerce. “We will not market through Canpotex . We talked to the premier (Brad Wall) about that. He understands that. We do think there’s room in the market for everybody.”

The issue was front and centre during the debate over BHP’s attempted hostile takeover of PotashCorp in 2010, when BHP CEO Marius Kloppers suggested PotashCorp might not remain part of Canpotex were the $39-billion takeover bid successful. But Wall opposed the deal, partly because the takeover threatened the existence of Canpotex, which has helped bolster potash prices and the province’s resources revenues.

Chris Ryder, vice-president of external affairs for BHP in Saskatoon, said the question of whether PotashCorp would remain part of Canpotex became a non-issue when the federal government rejected the takeover bid in late 2010. Last May, at the opening of Canpotex’s $55-million staging and maintenance facility at Lanigan, Wall said resource companies should be allowed to decide how to market their own production.

“The bid’s over. We’re moving ahead and building a big potash business in Saskatchewan,” Ryder said. “We’ve always said we wanted to market our own production, as we do with all of our commodities.”

Cutt, who is also president and CEO of BHP Billiton Canada, said the company plans to develop its own logistics, including port facilities at the Port of Vancouver, Wash., and a “new generation of railcars,” which will reduce loading and unloading times from 2 1/2 days to 12 hours.

That’s just one of the innovations BHP plans to bring to the potash business. Another is a German-made core machine that will increase shaft sinking rates from one metre to three metres per day. The company is planning to test the equipment at its Jansen Lake project near Saskatoon in March.

Another is “multiple pass” remote-controlled mining machines that increase mining productivity and reduce exposure to safety hazards, which will mean a lower cost of production at the Jansen Lake project, which has seen $1.2 billion invested to date.

Jansen, which would be built in stages up to eight million tonnes per year - making it the world’s largest potash mine - is just one of a number of projects BHP has on the books to reach its targeted production of 16 million tonnes per year.

Cutt confirmed that the BHP board will make a “go, no-go” decision on Jansen Lake later this year, with first production set for 2015.

“It’s their decision at the end of the day,” he said, “but we wouldn’t be doing the things we’re doing today if we didn’t have high confidence we’re going forward.”

Potash Corp. of Saskatchewan Inc. (POT), the world’s largest fertilizer producer by market value, will extend cuts in potash output as buyers of the crop nutrient delay purchases.

Potash Corp., which announced temporary shutdowns at two other mines in Canada last month, plans a four-week shutdown at its Allan operation in Saskatchewan starting Feb. 4, Bill Johnson, a spokesman for Saskatoon, Saskatchewan-based Potash Corp., said today in an interview.

“We’ve long had a history of matching supply to demand,” he said today by telephone. “We take the view that this is a normal course of business for us.”

Mosaic Co. (MOS), North America’s second-largest potash producer, said yesterday that fertilizer buyers are taking a “wait-and- see” attitude toward replenishing inventories by postponing purchases because of concern about the global outlook for economic growth.

Potash helps plants to grow strong roots, resist disease and withstand drought conditions.

“It appears that seasonally slow buying patterns this year have been exacerbated by economic uncertainty,” Jim Prokopanko, Mosaic’s chief executive officer, said yesterday on a conference call. Mosaic’s sales of potash were little changed in fiscal quarter ended in November compared with the previous quarter and down from a year earlier, he said.

Offshore Purchases

India, the largest offshore importer of potash, will delay signing new contracts to buy the nutrient until July and will instead rely on inventories, P.S. Gahlaut, managing director of Indian Potash Ltd., said in an interview in New Delhi today.

India’s current deal with potash suppliers expires at the end of March.

“The import market is a little slow, the domestic market is a little slow, but it’s somewhat seasonal,” Johnson said today. “This is traditionally a bit of a slower time for us.”

Potash Corp.’s latest cut will reduce output by between 150,000 and 160,000 metric tons, Johnson said. Production at the Allan mine will resume in early March.

The shutdown ‘is not good news, but does tend to support our view that industry pricing will remain strong,’’ Mark Connelly, a New York-based analyst at Credit Agricole Securities USA Inc., said today in a note to clients.

Potash Corp.’s Allan, Rocanville and Lanigan mines will probably resume production and may increase rates to make up for lost output, Connelly said.

Potash Corp. fell 2.3 percent to C$42.94 in Toronto. Mosaic dropped 1.2 percent to $52.67 in New York.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

Potash Corp. of Saskatchewan Inc. (POT) and Mosaic Co. (MOS) settled a legal dispute over a so-called tolling agreement at Esterhazy, the world’s largest potash mine.

Under the settlement, Mosaic will continue to supply some of the crop nutrient mined at Esterhazy to Potash Corp. until the end of next year, the companies said today. A trial scheduled to start at the Queen’s Bench Judicial Centre of Saskatoon, Saskatchewan, in January will be canceled and a counterclaim by Mosaic will be dismissed, Plymouth, Minnesota- based Mosaic said in a statement.

“This settlement provides Potash Corp. and its stakeholders with certainty through 2012,” Bill Doyle, chief executive officer of Saskatoon, Saskatchewan-based Potash Corp., said in a separate statement.

The dispute stemmed from a 33-year-old tolling arrangement under which Mosaic mined Potash Corp.’s potash reserves that overlap Mosaic’s mine at Esterhazy, Saskatchewan. Mosaic, which supplies its competitor with about 1.1 million metric tons of potash a year from Esterhazy at cost, had argued that its tolling obligation had been fulfilled.

As part of the companies’ settlement, Mosaic will also get a credit for 1.3 million tons of capacity at Esterhazy to be used to calculate Mosaic’s share of sales made by Canpotex Ltd. to international customers. Canpotex is the marketing company jointly owned by Potash Corp., Mosaic and Agrium Inc., North America’s largest potash producers.

The 1.3 million tons of capacity is currently allocated to Potash Corp., Mosaic said in its statement.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, dropped after Canada’s New Democrats called for the company to pay more royalties.

The New Democrats made the demand during a debate, the Canadian Broadcasting Corp. reported today. Dwain Lingenfelter, the party’s leader, argued for more royalties with Premier Brad Wall, leader of the Saskatchewan Party, which says the current system encourages investment, the CBC said.

Potash erased earlier gains and fell 1.4 percent to close at C$49.76 in Toronto.

To contact the reporter on this story: Simon Casey in New York at scasey4@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

SASKATOON, Saskatchewan, September 27, 2011 /PRNewswire/ –North Atlantic Potash Inc., the Canadian subsidiary of JSC Acron, and Rio Tinto today signed a joint venture agreement on potash exploration opportunities and possible mine construction.

The agreement relates to North Atlantic Potash”s potash permit holdings located in the southern part of Saskatchewan”s potash district. The joint venture will cover nine permitted areas that cover an area of about 600,000 acres (about 241,000 hectares) that extends from the eastern shore of Last Mountain Lake southeast toBroadview (see map on website: permits KP 375 in the west to KP 403 in the east).

An extensive exploration program is planned under the direction of the Joint Venture partners.

“This agreement is another step to maximize the development potential of our vast potash exploration holdings in Saskatchewan,” said Arie Zuckerman, President of North Atlantic Potash. “We strongly believe that together with the professional experience and financial capabilities Rio Tinto brings into this project, we will be able to be the next producing mine in Canada.”

“We”ve recently completed an extensive seismic survey on our Foam Lake area permits in the northeast segment of our holdings and will be embarking this fall on a drilling campaign in that area,” added David Waugh, CEO of North Atlantic Potash. “The opportunity this Joint Venture brings to North Atlantic Potash, is to expand our resource base knowledge in additional permitted areas, leveraging our land and holdings, while moving forward on advancing our potash development strategy.”

North Atlantic Potash
North Atlantic Potash is focused on developing potash production in Canada. It currently holds more than 2.7 million acres and 26 exploration permits in the Prairie Evaporite potash deposit in Saskatchewan. Evaluations are ongoing on their extensive holdings to prioritize exploration activities and other options to maximize their potential. http://www.northatlanticpotash.com

JSC Acron
Acron is a fast-growing group of interrelated companies and one of theleadingglobal mineral fertilizer producers. Key business segmentsinclude ammonia, nitrogen and complex mineral fertilizers, as well as organic and non-organic compounds. The Group includes three major production facilities, its own logistics infrastructure, an international sales network, and is investing in its own raw material base. http://www.acron.ru/en/

For further information:
Media Contacts: David Waugh, CEO
North Atlantic Potash
Mobile             +1(306)203-1950

Arie Zuckerman
North Atlantic Potash
Mobile +011-972-50-200-7067

SASKATOON - The world’s biggest miner says there is the potential for several new potash mines to be built in Saskatchewan, but it’s taking a measured approach an ambitious dream.

BHP Billiton (LSE:BLT) has about 14,500 square kilometres of land in the Prairie province and thinks there’s the potential for about five more mines.

“We’ve got a great land position in Saskatchewan … and we’re exploring that as fast as we can to make sure that we understand the resource that we have available to us,” Chris Ryder, vice-president of external affairs for BHP in Canada, said in a phone interview Wednesday.

BHP, a British-Australian company with global operations — including diamond and potash businesses in Canada, is currently developing its Jansen mine in Saskatchewan and hopes to start producing potash in 2015.

The project is expected to employ 1,900 people during construction and create about 1,000 operational jobs once the mine has reached full capacity.

BHP has sunk $1.2 billion into the Jansen project. That includes US$488 million announced in June to support the development of Jansen in its feasibility study stage. Mine design and engineering will now be completed along with initial surface construction and the first 350 metres of shaft sinking.

Ryder said Wednesday that BHP is also exploring two other properties in Saskatchewan near Melville and Young.

“We would establish then which of those properties would follow Jansen into production _ assuming that the demand scenario continues to unfold the way it has been and the way that we think it will,” he said.

Demand for potash — a key ingredient in fertilizer— is rising sharply around the world as farmers seek to boost crop yields and food production.

Ryder said at least three more mines are further out on the exploration horizon and the expectation is that they would look similar to Jansen. Although he stressed that BHP is not announcing five new mines.

It all depends on the demand for potash — a key ingredient in fertilizer — market conditions and the geology.

“We’re ambitious. We will build a conveyor belt of projects to feed global demand for potash but we’re not going to suddenly throw a handful of mines up overnight,” said Ryder.

Saskatchewan Premier Brad Wall said BHP has their own business model, but he welcomed the potential investment.

“BHP since last fall, and prior to it, has been a great corporate citizen and very good to work with, very transparent in all their dealings. And our Environment Ministry, Energy and Resources Ministries report that they’re just a very good company to deal with,” said Wall.

“They’re considering billions of dollars of investment, thousands of people already at work, literally … right now, even at the exploratory stage, so we’re grateful they’re here.”

Last year, BHP failed in a $40 billion bid to buy Saskatoon-based PotashCorp (TSX:POT), the world’s biggest fertilizer producer and one of Canada’s best known companies.

Wall vehemently opposed the deal on the grounds Saskatchewan could lose billions in revenue from taxes and royalties if the BHP bid were successful. The premier painted the proposed takeover as anti-Canadian and said the country’s strategic interests would be at risk if the province sold most of its potash industry to an international company.

Ottawa later rejected the takeover after concluding it failed to benefit Canada.

Talk of BHP’s potential expansion came a day after a major Russian company and global mining giant Rio Tinto PLC — the world’s No. 2 miner — said they’re teaming up in a joint venture that could lead to the construction of the next big potash mine in Saskatchewan.

Financial terms of the deal between North Atlantic Potash Inc., the Canadian subsidiary of Russia’s JSC Acron, and Rio Tinto were not revealed.

The Saskatchewan deal gives Rio Tinto a stake in the world’s most prolific potash producing region, while the Russian company will benefit from the Anglo-Australian miner’s rich cash resources and longstanding mining experience in Canada and around the world.

North Atlantic Potash holds nearly 1.1 million hectares and 26 exploration permits in the Saskatchewan potash belt.

The joint venture will cover nine permitted areas that cover about 241,000 hectares extending from the eastern shore of Last Mountain Lake southeast to Broadview in eastern Saskatchewan. The joint venture partners said they plan an extensive exploration program.

David Waugh, CEO of North Atlantic Potash, said the company will begin a drilling campaign on the company’s Foam Lake exploration properties this fall.

_ By Jennifer Graham in Regina

The potash will keep flowing to Saskatchewan fertilizer firm PotashCorp from a U.S. rival’s mine in the province until a court sorts out whether a supply deal between the two companies has already ended.

Minneapolis-based Mosaic Co. said Thursday it has been ordered by Saskatchewan’s Court of Queen’s Bench to keep supplying PotashCorp with potash from the Mosaic mine at Esterhazy, Sask., as per the terms of a tolling agreement which Mosaic claims was concluded in May.