K+S' Bethune mine in Canada shores up potash unit’s Q1 earnings

Source: ICIS News


LONDON (ICIS)--Increased output from its Bethune muriate of potash (MOP) mine in Canada helped German fertilizer major K+S ride out a late start to Europe’s spring fertilizer application season, the company said on Monday.

In its Q1 earnings results, K+S said deliveries from Bethune “far outweighed” the lost sales volumes in Europe resulting from a late start to the spring fertilizing season.

Prolonged winter weather, followed by a wet spring, led to a lack of fieldwork and greatly reduced sales across the Continent.

Bullish pressure on global MOP pricing also supported the K+S MOP unit's improved results, with its potash marketing arm reporting Q1 earnings before interest, tax, depreciation, and amortisation of €121m - up around 50% year on year.

However, the increase was partially eroded by reduced production at K+S’ Werra MOP plant in Germany, which suffered downtime due to “limited personnel and machinery availability”.

K+S’ Bethune project in Saskatchewan, Canada, was hailed as “an important milestone” by the company shortly after it announced the eventual closure of its Sigmundshall mine in Germany, in November last year.

At the time, K+S said its intention was to close Sigmundshall later this year, as the site’s salt reserves continue to dwindle and mining conditions become more “demanding”.

Bethune, K+S added, is a keystone to the company’s “Shaping 2030” strategic plan - a company-wide strategic overhaul that sets out to achieve annual operational savings of €150m by 2030.

The mine’s location among the potash-rich wilds of Canada, combined with Saskatchewan’s well-established transport routes to the likes of the US, Southeast Asia, and Latin America, positioned the modern mine as a strong replacement for the ageing Sigmundshall facility - a prediction which has ostensibly been proven true.

The first ship carrying potash from Bethune  left its handling and storage facility at Pacific Coast Terminals in Port Moody, Vancouver, on 24 October 2017.

Although the potash unit's performance was hailed by K+S, the producer's overall first-quarter net profits still fell by 25.2% year on year to €76.4m, amid higher selling expenses.

Selling expenses rose by 10.3% year on year to €225.4m in the first quarter, while interest expenses more than doubled to €29.2m, K+S said.

The company expects a “tangible increase in revenues and significant rise in EBITDA” in 2018.

Additional reporting by Nurluqman Suratman