UPDATE 1-Canadian Pacific Railway to transport K&S potash

Thu Jul 11, 2013 10:44am EDT

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By Rod Nickel

WINNIPEG, Manitoba, July 11 (Reuters) - K&S Potash Canada, a subsidiary of Germany's K&S AG, said Thursday it has signed an exclusive long-term deal for Canadian Pacific Railway Ltd to transport potash from a mine it is building in Western Canada.

The contract is based on volume, said K&S spokesman Michael Wudonig in an email, declining to release other terms.

The Legacy mine near Moose Jaw, Saskatchewan, is expected to begin production in 2016, and will be the province's first new potash facility in about 40 years. It's expected to have annual capacity of about 2 million tonnes of potash by the end of 2017.

Canadian Pacific competes with larger rival, Canadian National Railway Co, for the lucrative business of hauling the crop nutrient from land-locked Saskatchewan to Pacific Coast ports, as well as to the United States.

CP said it will build a rail spur line to access the mine site.

CP and CN each have long-term contracts with Canpotex Ltd, the offshore selling agency for Saskatchewan's three active potash producers, Potash Corporation of Saskatchewan, Mosaic Co and Agrium Inc, but CP controls the majority of potash shipments to the main Port Metro Vancouver, British Columbia.

Canadian Pacific shares rose 0.7 percent in morning trading in Toronto, while CN stock gained 0.2 percent.

K&S shares in Frankfurt added 0.5 percent.

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