POTASH-INTERVIEW-Potash Corp moving ahead on expansions -CEO

* Potash Corp's output expansion moves full steam ahead

* Sees potash demand starting to rebound in December

* Says new potash mines not viable at current potash price

* Sees chance of consolidation among larger players

(In U.S. dollars unless noted)

By Euan Rocha

TORONTO, Sept 22 (Reuters) - Potash Corp (POT.TO), the world's largest producer of potash, a major crop nutrient, aims to emerge as the biggest winner when demand for the fertilizer rebounds from this year's sharp decline.

Even though potash exports fell more than 70 percent in the first half of the year, Potash Corp of Saskatchewan has kept investing to expand its production capacity, its chief executive, Bill Doyle, said in an interview. The company plans to pour billions of dollars more into "brownfield" expansions of existing capacity over the next few years, while steering away from uneconomic greenfield projects that involve development of new deposits.

"When I talk about brownfield expansions, even though we are expanding and bringing capacity onstream, it doesn't mean we are going to operate it, because we have always matched supply to demand," said Doyle in an interview with Reuters.

"Whenever the demand comes back, that's when we will produce and we won't produce one more pound than we need to," he said, adding that the company has idled about 70 percent of its potash production capacity this year due to weak demand.

The company produced 8.7 million tonnes of potash in 2008, which accounted for 17 percent of global production and 22 percent of global potash capacity.

But the Saskatoon, Saskatchewan-based company plans to boost its constructed capacity to 18 million tonnes by 2012 through expansions at its Cory, Rocanville and Allan mines in Saskatchewan and its facility in New Brunswick.

"The good news for us is the crop will be planted in 2010, farmers are taking a tremendous amount of nutrients off with this year's harvest and they will have to replenish those nutrients in 2010," Doyle said.

At the height of the agricultural boom in 2008, potash prices peaked at more than $1,000 a tonne, but have since fallen to $460 a tonne, as demand evaporated and India was able to force producers into lowering prices this summer. [nN13161464]

Many in the supply chain were stung when prices fell and had to take writedowns on their potash inventories.

Potash buyers and dealers in North America and overseas remain nervous that pricing could drop further and are waiting for China to sign its annual import contract, which will likely set a floor on potash pricing.

Doyle expects North American buyers to begin to restock inventories in December, ahead of the early planting season in the U.S. Southeast.

"We really expect December to be the breaking point. Also, the reason I say this is we think we will have a Chinese contract in November," Doyle said.

NEW MINES NOT VIABLE

Doyle believes greenfield mines are not viable at current potash prices. He says the all-inclusive cost to build a potash facility with annual capacity of 2 million tonnes a year is about $4 billion to $5 billion.

"One thing you can't cheat in the potash industry is ... time. You just need seven to 10 years to bring on a new mine," Doyle said. "We are sitting here now in 2009 and we know that there is no greenfield mine coming onstream anywhere in the world until after 2015."

Doyle, who has steered Potash Corp for more than a decade, said potash pricing would have to be $950 a tonne at the mine-gate to make a greenfield project profitable at this time.

There are numerous small potash exploration companies in Canada that hope to capitalize on the frenzied investor interest in the sector, but Doyle said their plans are merely a "pipe dream."

"They have a dream, they are hoping, they are promoters, but the chances of those people actually building a potash mine are zero," he said.

Doyle sees a greater chance of consolidation among larger producers, or the possibility that Australia's BHP Billiton (BHP.AX) (BLT.L) might acquire an established player while also developing its greenfield project.

Mining giant BHP has clearly signaled its interest in the potash sector and plans to make a decision on whether to go ahead at its Jansen mine development in Saskatchewan. It could begin production around 2015 and reach full production by 2026. [nSYD454495] [nN12285109]

Potash Corp, which has equity stakes in Arab Potash Co APOT.AM in Jordan; Israel Chemicals Ltd (ICL.TA) in Israel; Sociedad Quimica y Minera de Chile S.A. (SQM.N) in Chile; and Sinofert Holdings Ltd (0297.HK) in China; may consider increasing its interest in these companies, Doyle said, but he remained coy on other acquisition prospects.

"It depends on the numbers and it depends on the payback," he said.

(Reporting by Euan Rocha; editing by Frank McGurty)

((euan.rocha@thomsonreuters.com; +1 416 941 8185; Reuters Messaging: euan.rocha.reuters.com@reuters.net)) Keywords: POTASH/POTASHCORP . Keywords: POTASH/POTASHCORP

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