(This story is part of a special package highlighting the
global potash industry.)
* Canada production seen around 17 mln tonnes in 2010
* Mine expansions in Saskatchewan remain on track
(In U.S. dollars unless noted)
By Rod Nickel
WINNIPEG, Manitoba, Sept 23 Canadian potash
production should recover in 2010 as demand from China and
India picks up, after a year of output cuts and mine worker
Big consuming nations need potash to grow high-yielding
crops to feed their burgeoning populations. That fundamental
demand should return next spring as the global economy moves
past the worst of the recession, said Kevin Stone, senior
commodity analyst with Canada's Natural Resources Department.
"I'm 100 percent confident it will be normal," Stone said.
"If we want to maintain living standards, if we want to see
further (crop) production, we need fertilizer," he said, adding
that with increased demand, the price of potash should also
rise in spring from its current $460 level.
Canadian production should reach 17 million tonnes in 2010,
matching its 2008 level, Stone said. Through the first six
months of 2009, Canada produced just 3.5 million tonnes.
Production in the rest of the world -- Russia, Belarus,
Israel, Germany and Jordan -- should also return to normal, he
said, bringing global production to about 55 million tonnes.
The government of the western Canadian province of
Saskatchewan, one of the world's richest potash regions, also
forecasts a return to normal production and strong medium- to
Mine expansions planned over the next 11 years by all three
major producers in Canada -- Potash Corp (POT.TO), Mosaic
(MOS.N) and Agrium (AGU.TO) -- remain on track, said Kent
Campbell, deputy minister of Saskatchewan's Energy and
"There's been short-term pain for all us ... but longer
term things are looking very good for Saskatchewan with respect
to potash," he said.
In August, Saskatchewan dropped its price assumption by
$100 to $456 per tonne, reflecting lower-priced Russian and
Canadian sales to India [ID:nBNG368711].
Australia's BHP Billiton BHP.L plans the world's biggest
potash mine in Saskatchewan, but the time it takes to build it
and reach significant production means it won't affect
fundamentals for at least six years, Stone said.
The fact no new potash mine has been built in decades makes
it hard to predict what price level potash would have to hold
to ensure the new mine is viable, but conventional wisdom would
suggest a price around $500 a tonne, Stone said.
The project is in the pre-feasibility stage and will not be
approved for at least 12-18 months, BHP has said. The company
declined comment on its price assumption.
(Editing by Janet Guttsman)