Canada's major potash companies have wasted no time announcing new investments in their Saskatchewan operations just hours after the province boosted mining tax incentives for potash producers.
Potash Corp. of Saskatchewan (TSX:POT) , the world's biggest supplier of the fertilizer, said it would bring back 1.9 million tonnes of its idle production capacity at PCS facilities in Lanigan and Allan.
Potash Corp. said it would invest $275 million US in the expansion.
Calgary-based Agrium (TSX:AGU) announced it would spend $65 million US to boost production at its Vanscoy, Saskatchewan mine by 310,000 tonnes by 2006.
Minnesota-based Mosaic Company (NYSE:MOS) said it would increase the production capacity at its mine in Esterhazy, Saskatchewan by 400,000 tonnes by the fall of 2006, spending $28 million US in the process.
All three potash companies credited the Saskatchewan government's sweetening of tax incentives as the primary reason for their expansion decisions.
"We are very pleased that the Government of Saskatchewan has revised the resource tax system which enables Mosaic to continue to invest in Saskatchewan," said Mosaic CEO Fritz Corrigan in a statement.
"This capital spending is consistent with our growth plan to meet growing global potash demand," he said.
The three potash producers also said they were considering further production boosts.
The provincial government on Monday brought in a 10-year base payment holiday for potash companies that expand their operations by 200,000 tonnes or more. The province also brought in a capital investment incentive to promote production expansion.
The Potash Corporation of Saskatchewan estimates the incentives will result in pre-tax savings of $6.25 US per tonne.
Potash shares slipped $1.03 to end at $107.61 on the TSX.