By Allison Martell
Toronto Oct 8 The Russian potash "soap opera"
could weigh on prices until demand rises substantially or
producers shut some capacity, the chief executive of Canadian
fertilizer company Agrium Inc said on Tuesday.
Prices for the crop nutrient have slipped since mid-summer,
when Russian's Uralkali OAO quit its export
partnership with Belaruskali, owned by the Belarus government,
saying it would seek to boost volume.
The business dispute quickly turned into a diplomatic row
after the CEO of Uralkali was detained in August while visiting
Belarus, which depends on income from Belaruskali.
"The soap opera in Russia, and I think that's the best way
to characterize it ... I don't know how it's going to play out,"
said Agrium CEO Mike Wilson at the company's investor day in New
Wilson said the structure of the market has to go back to
where it was, and some producers need to shut capacity, or
demand has to soar above 60 million tonnes. Otherwise, he said,
prices will be under pressure.
In June, the International Fertilizer Industry Association
forecast 2013 potash demand of about 33 million tonnes.
"I am a little more cautious than some of our competitors,"
said Wilson, but added that he was optimistic over the long
term. "There's huge barriers to entry."
Agrium is aiming to complete an expansion at its Vanscoy,
Saskatchewan, potash mine by the end of 2014. The company has
said repeatedly the project still makes sense at current prices.
ALASKA PLANT COULD RESTART
Agrium is in the early stages of evaluating whether to
restart an idled nitrogen plant in Kenai, Alaska, said Chief
Operating Officer Chuck Magro, who is tapped to become CEO when
Wilson retires at the end of this year.
The Kenai facility was idled in 2008 because of a shortage
of natural gas.
"I just want to make this really clear. Today, there's not
enough natural gas to restart Kenai," said Magro. "But there is
a lot of gas drilling in the Cook Inlet again, and we are
working with the gas companies to determine if there is a
possibility to restart those assets."
Magro said that determination should take about a year.
Shares fell 3.3 percent to C$87.50 on the Toronto Stock
Exchange and 3.2 percent to $84.95 on the New York Stock