PotashCorp N.B. unfazed by potash stock slump
Changes to the global potash market threaten Canadian price stability
The collapse of a potash cartel in Eastern Europe earlier this week caused panicky selling in the stock market, and raised fears about potash revenue and royalties in New Brunswick.
However, the general manager of PotashCorp in New Brunswick appears unfazed.
Shares of major North American potash producers fell sharply Tuesday on word that the Russian company, OAO Uralkali is pulling out of a marketing group and is expected to undercut competitors' prices for the fertilizer.
The company announced it was withdrawing from a joint venture with another company from Belarus that set the price for about a third of the world's potash supply. Instead, it plans to sell more potash to China, which buys about one fifth of the world's supply of the fertilizer.
Some analysts predict potash prices could drop as much as 25 per cent as a result.
However, no changes are expected at the potash mine outside Sussex, according to Bill Johnson, the senior director of public affairs with PotashCorp.
"Right now it's certainly business as usual at all of our mines in Saskatchewan and New Brunswick," said Johnson.
"Really, we'll keep an eye on the situation, but for now we'll continue to market our potash the same way we always have."
Stewart Brown, the general manager of PotashCorp in New Brunswick said miners are getting ready to end their maintenance shutdown early, and go back into production.
The company has orders to fill in Central and South America, and while other potash producers are sitting on an oversupply, New Brunswick is sold out, said Brown.
"We've basically got no inventory for sale," he said. "And we have commitments in August and September to meet as we come out of our shutdown period.
"So we've had a strong year here in New Brunswick," Brown said.
Price volatility won't affect new mill
PotashCorp New Brunswick employs 525 staff in addition to hundreds of contractors in Sussex, and is the biggest mineral royalty engine for the province, generating $25 million last year.
Potash, a key ingredient in fertilizer, is also the largest dry bulk commodity moving through the Saint John port.
PotashCorp is also preparing to bring its new $1.67-billion mine near Sussex online, which will more than double production from the existing mine once it is fully operational by 2015.
Brown said price volatility cannot reverse that commitment.
"I think the big impact would be on those who are considering entry into the market with new mines," he said. "Whether or not somebody is prepared to invest billions and billions into a new mine."
Keith Attoe, a director with Atlantic Potash, came on the scene two years ago. In February, he announced plans to build a $350-million fertilizer plant in Saint John.
Attoe had visited the province before to sign a lease in the Sussex area. He said his company, backed by Chinese investors, was optimistic about starting its own mine in Millstream.
In a statement to CBC News on Tuesday, Attoe said, "We are monitoring the situation, and at this time there are no changes to our plans."