Germany K+S to cut costs, stay committed to potash project

30 August 2013 22:16  [Source: ICIS news]

HOUSTON (ICIS)--K+S plans to adopt a cost-cutting programme because of uncertainty in the potash market, although the company remains committed to its potash project in Canada, the German fertilizer producer said on Friday.

Earlier in August, the company said it expected to begin production at the Saskatchewan project by 2016 with an eventual capacity of 2m tonnes/year.

It also announced shortly after that its second-quarter adjusted group earnings had fallen by 25% year on year due to lower sales and prices for its key potash and magnesium products division.

The company said while it is not making predictions for potash pricing, there are signs that customers are becoming more reluctant in wake of the recent developments within the industry.

Russia-based Uralkali had left the Belarusian Potash Co (BPC) marketing group, alleging that partner Belaruskali had made a number of deliveries outside of the BPC.

As a result of the breakup of BPC, potash prices are expected to fall by as much as 25% through the second half of 2013.

In order to maintain the profitability and liquidity of our company, it will be necessary for all units to make a significant contribution, said CEO Norbert Steiner in a letter to employees.

No one can say with certainty at the moment at what level prices will stabilise. It is also equally difficult to reliably estimate today, how long this current phase will last. Therefore, we should prepare ourselves for tougher times.

Steiner said the decision to rein in spending will not have any immediate bearing of the future of the Canadian project.

We are firmly committed to our Legacy Project, as it is of exceptional strategic importance for the K+S Group and will significantly strengthen our entire company's international competitiveness, Steiner said.

By: Mark Milam
+1 713 525 2653

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