K+S can handle $2.5bn Canada potash investment – analyst

15 February 2011 20:07  [Source: ICIS news]

TORONTO (ICIS)--German fertilizer major K+S has sufficient financial strength to develop its $2.5bn (€1.9bn) potash project in Canada’s Saskatchewan province, an analyst said on Tuesday.

K+S acquired the greenfield potash project - with a potential capacity of 2.7m tonnes/year - as part of its takeover of Canada’s Potash One.

Carsten Muller, an analyst at Berlin-based FM Research, said K+S had a “comfortable cash buffer” and could raise additional debt finance to develop the project, if necessary.

Also, the money would not be needed immediately but rather would be raised over several years, Muller said. First potash from the Canadian project is expected to be produced in 2015, at the earliest, K+S said in November when it announced the takeover.

Muller also said K+S would benefit from rising potash prices on the back of higher global prices for agricultural commodities and food.

K+S now holds over 90% of Potash One, a level that would allow K+S to squeeze out the remaining shareholders under Canadian corporate law, Muller said.

K+S is one of a number of firms planning potash projects in Saskatchewan. Anglo-Australian mining giant BHP said earlier this month it was moving ahead with a feasibility study for its 8m tonne/year Jansen project in the province.

($1 = €0.74)

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By: Stefan Baumgarten
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