New Canada PotashCorp CEO needs to address overcapacity – analyst

24 April 2014 19:52  [Source: ICIS news]

TORONTO (ICIS)--PotashCorp’s incoming CEO will need to address the overcapacities the company built up in past years, an analyst said on Thursday.

The Saskatchewan-based potash major will be led from 1 July by Jochen Tilk. Tilk succeeds Bill Doyle who will stay on as an advisor to the company.

Mark Gulley, an analyst with international brokerage BGC Partners, said that PotashCorp had over-expanded, with currently about 4m tonnes/year of capacity temporarily idle, resulting in about $3bn in capital sitting idle.

"We look to see how the new leadership intends to deal with that, and what cost cuts may be indicated if industry operating conditions remain subdued," Gulley said.

Gulley also noted that cuts in fertilizer subsidies in India were a conundrum for the industry that may not be resolved until well after India’s elections, which are expected to end on 12 May.

Commenting on reports in Canada’s financial press that Anglo-Australian mining major BHP Billiton may make another attempt to take over PotashCorp, Gulley said that he was sceptical.

"We have heard news reports about BHP looking at Mosaic and at PotashCorp, and we have heard reports about Vale looking at Mosaic, but nothing has come to fruition, so I think one has to be fairly sceptical about those kinds of reports," he said.

BHP failed in 2010 to take over PotashCorp when Canada's federal government blocked the hostile bid.

By: Stefan Baumgarten
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