Nutrien may raise potash output as sanctions curb Russia supply
2022.05.03 20:36
FILE PHOTO: Marks of the cutting head are seen on the potash face at Nutrien’s Cory potash mine near Saskatoon, Saskatchewan, Canada August 12, 2019. REUTERS/Nayan Sthankiya
By Tom Polansek
CHICAGO (Reuters) – Canada’s Nutrien (NYSE:NTR), the world’s largest fertilizer company, is assessing whether to further increase potash production as sanctions continue to limit shipments from Russia and Belarus, its interim Chief Executive Ken Seitz said.
Prices of crop nutrients such as potash and phosphate have skyrocketed as sanctions on major exporter Russia for its invasion of Ukraine have disrupted already tight supplies.
The price increases have raised concerns about food shortages as some farmers apply less fertilizer and boosted profits for manufacturers including Nutrien and rival Mosaic.
Nutrien is assessing the duration of the Ukraine conflict to determine whether there is a need to ramp up production, Seitz said. Combined, Russia and Belarus accounted for more than 40% of global exports of potash last year, one of three critical nutrients used to boost crop yields.
In March, Nutrien said it planned to increase potash output by nearly 1 million tonnes to about 15 million tonnes this year in response to the supply uncertainty from Eastern Europe.
The company could further expand its production to 18 million tonnes without a major capital investment at mines in Saskatchewan, Seitz said. Larger investments would be needed to increase capacity from 18 million to 23 million tonnes, he said.
“We intend to grow our volumes but just not stop at 18 million tonnes,” Seitz said in an interview on Tuesday. “We intend to continue to grow with the market.”
Seitz told analysts on a conference call that the timeline for increases would be a few years, not decades, and that Russia’s invasion of Ukraine, which Moscow describes as a “special military operation”, could impact global fertilizer markets beyond 2022.
“Sanctions on Russia and Belarus have the potential to create more lasting changes to global trade patterns, as customers prioritize reliability of supply,” he said.
Mosaic said on a separate call that it is exploring debottlenecking initiatives at its mills to ramp up fertilizer output as quickly as possible.
The initiatives could increase its potash production by about 1.5 million tonnes by the end of 2023, Mosaic said, adding that it expects it will take two to four years for the global potash deficit to catch up with demand.
