* Expansion to add 750,000 tonnes of annual capacity
* Construction to be completed by 2014
* Still committed to CF bid
* Shares down 3 pct on TSX
(Adds details, company and analyst's comments and share price.
In U.S. dollars unless noted)
TORONTO, Dec 17 Canada's Agrium Inc (AGU.TO)
said on Thursday it expects final approval of expansion at a
potash mine in late 2010, when demand for the mineral used in
fertilizer is expected to rebound.
Calgary, Alberta-based Agrium said the $800 million
expansion at its Vanscoy, Saskatchewan, potash mine is expected
to add 750,000 tonnes or 37 percent of the site's annual potash
Most of the construction work, awarded to SNC-Lavalin
(SNC.TO) and PCL Industrial Management, is to be completed by
2014, with full production reaching 2.8 million tonnes in
Agrium boosted its expansion plans from 300,000 tonnes to
750,000 about six months ago, said Agrium spokesman Richard
Downey. Even so, one analyst said the expansion is bigger than
he had expected and would take longer to complete.
Analyst Raymond Goldie of Salman Partners Inc. said he had
expected the mine to expand to 2.5 million tonnes by 2012 from
current capacity of 2.05 million tonnes.
"They're delaying their expansion from what (I) had
expected but they're also making it bigger," Goldie said. "I'd
say it's pretty much a wash for markets."
Agrium shares on the Toronto Stock Exchange were down 3
percent at C$64.14 in early trading on Thursday.
News that Belarussian Potash Co. may look to settle deals
with China on a spot basis from 2011, replacing annual
contracts, may have pushed down shares of Canadian producers,
Goldie said. [ID:nLDE5BG036]
Shares of Potash Corp of Saskatchewan (POT.TO) dropped 2.9
percent at C$121.85.
China, one of the biggest importers of Canadian potash, has
not yet signed a contract for this year, adding to uncertainty
Overall weakness on the TSX is also weighing against the
potash stocks, Goldie said.
Agrium's Vanscoy mine has run at less than full production
this year as potash demand remained weak. The company expects
to return the mine to full speed in the first quarter of 2010,
The company said the expansion was needed to feed global
demand for the mineral, which it expects to show signs of
recovery beginning next year.
Fertilizer prices jumped in early 2008 on surging demand,
tight inventories and record grain prices. But the global
credit crunch and the deepening economic downturn have weighed
on the agricultural sector, and grain and nutrient prices have
fallen as farmers have deferred applying fertilizer.
Agrium is one of three major potash producers in
Saskatchewan that are expanding, along with Potash Corp of
Saskatchewan (POT.TO) and Mosaic Co (MOS.N).
Agrium also reaffirmed its determination to acquire rival
CF Industries (CF.N).
CF has been fending off Agrium's overtures since February
and is itself locked in a hostile campaign to acquire U.S.
fertilizer maker Terra Industries TRA.N.
Agrium's $5 billion bid for CF is contingent on CF dropping
its takeover bid for Terra.
(Reporting by Scott Anderson and Rod Nickel; Editing by Frank