UPDATE 3-Potash Corp plans $1.8 bln mine, mill expansion

(Adds analyst comments; in U.S. dollars unless noted)

By Jeffrey Jones

CALGARY, Alberta, Nov 14 (Reuters) - Potash Corp of Saskatchewan Inc (POT.TO: Quote, Profile, Research, Stock Buzz) plans to expand a Canadian potash mine and mill for $1.8 billion to boost the company's output of the fertilizer by nearly 15 percent within five years, it said on Wednesday.

Potash Corp, the world's largest fertilizer producer, said it will expand the capacity of its Rocanville facility in southeastern Saskatchewan by 2 million tonnes a year amid strong global demand and high prices for the crop nutrient.

The expansion will boost company-wide potash production capacity to 15.7 million tonnes annually by 2012, three years earlier than previously estimated. The Rocanville operations now have a capacity of 3 million tonnes.

Investors welcomed word of the expansion, driving Potash Corp shares up C$5.03, or nearly 5 percent, to C$113.15 on the Toronto Stock Exchange, and up $4.36 to $117.12 in New York.

UBS Securities analyst Brian MacArthur said the new output is expected to be low-cost, tax-efficient and eventually boost Potash Corp's allocation in Canpotex, the exporting joint venture of Canada's potash fertilizer producers.

The price tag for the project is 25 percent less than building an all-new mine and mill in Saskatchewan, which would require new infrastructure such as transportation links, Potash Corp Chief Executive Bill Doyle said.

"With our existing facilities at Rocanville, we have a significant head start," Doyle said in a statement. "For example, we only need to sink one new shaft instead of two, which will save considerable time and money."