INDUSTRIAL METALS / MINERALS
Global potash demand to rise in 2013 - PotashCorp
According to PotashCorp CFO, Wayne Brownlee, global demand for the fertilizer is set to climb to between 56 million and 60 million tonnes in 2013
Posted: Thursday , 06 Sep 2012
WINNIPEG, Manitoba (Reuters) -
Global demand for the soil nutrient potash, key for growing crops like corn, looks likely to climb to between 56 million and 60 million tonnes in 2013, depending largely on a potential sales rebound to India, the chief financial officer of Potash Corp of Saskatchewan said on Thursday.
Global potash demand in 2012 looks likely to total around 53 million tonnes, CFO Wayne Brownlee said in an online question-and-answer session.
"The question is, how robust is the Indian response going to be in 2013," he said. "That is going to be the key determinant, but given where grain prices are, food prices are, given the amazing incentive farmers have right now for making a profit in the next 12 months, it looks pretty good."
India is the second-biggest potash buyer globally, but sales slumped this year after its government lowered subsidies for potash and phosphate, making those fertilizers more expensive for Indian farmers.
Saskatoon, Saskatchewan-based Potash Corp is the world's biggest fertilizer maker.
Grain prices have shot up this year due mainly to severe drought in the U.S. Midwest, offering farmers a chance to maximize profits by boosting plant yields through fertilizer.
Canpotex Ltd, the marketing agency that sells Saskatchewan potash to offshore markets on behalf of Potash Corp, Mosaic Co and Agrium Inc , will hold discussions in the next week or two with Chinese buyers on a supply contract for the second half of 2012, Brownlee said.
But Brownlee said he was not sure if they would agree on a contract in September.
A new contract between Canpotex and Indian buyers is also expected in the second half, but Brownlee said India's politics make the situation difficult to predict.
Most of Potash Corp's production comes from the Western Canadian province of Saskatchewan, which is home to an estimated 40 percent of global potash reserves.
The Saskatchewan government depends on potash for hundreds of millions of dollars in royalties annually, and has said it may change its royalty formula to lean more heavily on production levels than it currently does.
"We're not overly worried about that," Brownlee said. "There's not been an indication that there will be a revenue grab coming at us at all, and if anything it would be more of a finessing or fine-tuning ... to still get the investment but also perhaps generate a bit more stability for the government."
Along with expansions by existing players, Germany's K+S AG and BHP Billiton Ltd have started work on new mines. Saskatchewan is concerned that too much new production will pressure potash prices, which may reduce its royalty take.
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