(Refiles with simplified headline)
* No price change so far, but Europe's supply running low
* Company sticking to plans for Canadian potash mine
* K+S CEO says Uralkali has harmed itself
FRANKFURT, Aug 11 German mineral producer K+S
is braced for a sharp fall in prices for potash after
last month's break-up of one of the world's biggest producers,
Belarusian Potash Co (BPC).
"Nothing at all has changed in the prices yet, but
undoubtedly there is enormous turmoil in the markets due to
Uralkali's announcement to end the sales alliance with the
Belarussians," K+S Chief Executive Norbert Steiner told Sunday
newspaper Welt am Sonntag.
Last month Russia's Uralkali announced it had
ended its participation in Belarusian Potash Company (BPC), a
joint venture with local partner Belaruskali, in a move that
experts likened to Saudi Arabia leaving OPEC.
Uralkali said the decision to quit BPC may cut global potash
prices by 25 percent to below $300 per tonne in the second half
A week later, a cautious K+S abandoned its 2013 profit
target "following the principle of prudence", warning it no
longer believed a slight increase in operating earnings was
A key test for K+S will come when European farmers soon
begin ordering their new seasonal supplies of potash.
"That's where we generate half of our revenue," Steiner
However, inventory levels are high in another important
market, Brazil, the biggest user of potash in Latin America.
"Larger amounts of potash by many providers are in transit
(to Brazil) via ships. Reserves are also in the harbours, that
have not yet been transported into the country's interior," he
Steiner, whose company is considered to be more vulnerable
than rivals because of its high German production costs, said
Uralkali's move wiped out roughly 15 billion euros from the
market value of potash producers worldwide.
"I don't want to speculate about the motive - there is no
economic sense behind it. Uralkali ended up damaging itself with
its surprising strategic turn, since it's own share price has
dropped noticeably in recent days," said Steiner.
"Overall it's already been a very costly move for Uralkali."
However, in separate comments made to Sunday weekly
Frankfurter Allgemeine Sonntagszeitung, the K+S CEO reaffirmed
he would proceed with plans to build a new potash plant in
Canada, since reserves in the ground in Germany would last only
35 more years.
In April K+S warned that the "Legacy Project" plant would
cost a total of 4.1 billion Canadian dollars ($3.98 billion),
C$850 million more than was initially estimated in its November
2011 feasibility study.
The potash mine and production facility under construction
near Moose Jaw will be the first new greenfield potash mine
built in Canada's Saskatchewan province in nearly forty years.
Production from the mine is targeted for the summer of 2016,
reaching an annual capacity of 2 million tonnes at the end of
($1=1.0302 Canadian dollars)
(Reporting by Christiaan Hetzner; Editing by Greg Mahlich)