PotashCorp announces further shutdowns at Canadian mines

18 October 2012 10:55  [Source: ICIS news]

LONDON (ICIS)--Canadian fertilizer producer Potash Corporation of Saskatchewan (PotashCorp) has announced a fresh set of inventory-related shutdowns at its Rocanville and Lanigan mines in Saskatchewan because of weak global demand for the crop nutrient, the company said in a release late on Wednesday.

The producer will shut both mines for eight weeks, citing its practice of “matching supply with demand”.

The Rocanville mine will not operate between 2 December 2012 and 26 January 2013, while the Lanigan mine will be shut between 18 November 2012 and 12 January 2013.

This is the second shutdown announced for the Lanigan mine in the last two months. It was previously shut for nearly a month between 15 September and 13 October.

The Lanigan and Rocanville mines are the company's largest potash mines by operational capacity, at 3.6m tonnes and 2.8m tonnes of potash per year, respectively.

Demand for potash has been lower in 2012 compared to the previous year, as two of the world’s biggest importers, China and India, delayed signing fresh contracts because of sufficient inventory levels.

Importers have expressed their unwillingness to sign contracts until prices are lowered.

China was expected to renew contracts in June or July this year, but a conclusion is now expected only in January or February 2013. In the first half of 2012, China paid $470/tonne (€357/tonne) CFR (cost and freight) for muriate of potash, but is now demanding lower prices.

India has gone a year without signing a new contract. It last imported 6m tonnes in April 2011-March 2012 at $470-530/tonne CFR. India is also expected to finalise a contract in January or February 2013.

As a result of the delays in completing contracts with buyers in China and India, PotashCorp on Wednesday lowered its earnings forecast for full-year 2012 to below its predicted range.

The company said earnings guidance for full-year 2012 will fall below the low end of the $2.80-3.20 per share range forecast in July, as a result of lower than expected sales volumes.

Earnings for the third quarter of 2012 are expected to fall at the bottom of PotashCorp’s $0.70-0.90 per share expectations, the company added.

($1 = €0.76)

By: Deepika Thapliyal
+44 208 652 3214

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