22 April 2013 17:28 [Source: ICIS news]
LONDON (ICIS)--K+S will pump Canadian dollar (C$) 4.10bn (€3.98bn) of capital expenditure (capex) into its Legacy potash project in Canada’s Saskatchewan province, an increase of C$850m from an earlier estimate of C$3.25bn, the Germany-based potash producer said on Monday.
K+S’ supervisory board approved a proposal to increase the project's capex as additional investments are required for modifications of plant components and infrastructure, and due to higher raw material and labour costs, the company said.
The company is on track to reach an operational capacity of 2m tonnes/year of potash by 2017 at the Legacy project although commissioning of the plant is now expected in the summer of 2016 and not at the end of 2015 as indicated earlier, K+S said.
Financing of the potash project, which is “still economically attractive” will be done through existing liquidity, future cash flows and new debt, the company said.
“Taking all data of the profitability calculation into account the project is economically attractive and still fulfils the requirement of the group, to earn a 15% premium on the cost of capital before taxes,” said Norbert Steiner, chairman of the executive board of directors at K+S.
The company plans to export potash to Asia, South America and North America from Saskatchewan.
The Legacy solution mining project will reduce the company’s production costs and extend the average lifetime of the mines, K+S added.
($1 = C$1.03)
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