31 July 2013 By: Will Conroy
LONDON (ICIS)--Potash price falls sparked by the huge market shake-up caused by Uralkali's withdrawal from a cartel could signal the end for major potash investment projects, a bank said on Wednesday.
Among the investment plans that have been thrown into doubt was miner BHP Billiton's project to spend $14bn on creating the world's largest potash mine by 2017 in western Canada, Russia's Raiffeisenbank added.
BHP Billiton refrained from comment on what the consequences could be for its Jansen mine following Russian Uralkali's announcement on Tuesday that it was exiting the Belarusian Potash Company (BPC) export sales group, after disagreements with its partner, Belarus-based potash producer, Belaruskali.
Uralkali said it would be aiming for 100% production now that it was not bound by BPC stipulations and expected its decision to quit the cartel would push global potash prices down to $300/tonne (€225/tonne) from the current $400/tonne in the second half of this year.
Nitrogen phosphorus potassium (NPK) fertilizer producers could be among the beneficiaries of any such price cut as it would reduce their feedstock costs, analysts say.
Raiffeisenbank noted that Uralkali has confirmed that it is delaying its own potash expansion project, namely its planned $2.4bn (2.5m tonnes/year) Polovodovsky mine.
Prior to Uralkali's withdrawal from BPC, the global potash market was dominated by the BPC/Canadian Potash Exporters (Canpotex) oligopoly, which controlled approximately 70% of the global potash market.