PotashCorp strike has supported prices - CEO

23 October 2008 19:32  [Source: ICIS news]

HOUSTON (ICIS news)--PotashCorp CEO Bill Doyle said on Thursday a strike at three of his company’s Canadian facilities has provided upward price pressure on potash fertilizer, allowing the company to produce record earnings despite the labour dispute.

“If the union leaders hadn’t led our folks out on strike, we probably would have taken some shut downs anyway to anticipate the slowness of the market. In a certain sense they’ve done that for us,” Doyle said, speaking with anaylsts in an earnings call after Potash Corporation of Saskatchewan unveiled record profits.

Some 500 workers began a strike on August 7 at the company’s 2m tonne/year plant in Allan, 800,000 tonne/year plant in Cory and 300,000 tonne/year plant in Patience Lake. All three facilities are in Saskatchewan province and produce potash fertilizer.

Last month, retailers claimed PotashCorp had declared force majeure on some of its white potash shipments as a result of the labour dispute.

Contract negotiations begin soon at the company’s 2.3m tonne/year plant in Lanigan, where workers are legally eligible to strike as early as January, and a 1.4m tonne/year plant in Rocanville, where employees are legally eligible to strike as early as April.

The United Steelworkers union – which represents the striking workers at the other three plants – has vowed to expand the labour dispute.

Garth Moore, president of PotashCorp’s potash division, downplayed the possibility of a strike spreading to the Lanigan facility.

“We are expecting a labour agreement there in due course. I don’t want to comment about what might happen in the next year,” Moore said.

The labour dispute has crimped the global potash market, where supply is regularly outstripped by demand. PotashCorp is the biggest producer of potash fertilizer in the world.

Doyle said share prices of PotashCorp – which peaked at more than $240/share (€187/share) over the northern hemisphere summer and now trade at less than $70/share on the New York Stock Exchange – were irrelevant to the company’s day-to-day operations.

“We don’t manage the company for the share price. I know some people would like us to do that, but we don’t,” Doyle said.

In a 17-minute statement before opening the call to questions from analysts, Doyle lashed out at a market he said “used a broad brush” in valuing commodities and commodity-based companies.

“As the market regains confidence and moves forward, we anticipate investors will be more discriminating in where they choose to invest their money. Not all assets were created equally,” Doyle said.

Shares of PotashCorp fell 94 cents/share, or more than 1%, to trade at $66.16/share on Thursday.

($1 = €0.78)

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By: David Rosen
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