* Says new projects need potash price of over $600/T
* Says believes in the efficiency of BPC trader
* Says global demand to reach 60 mln tonnes by 2015-2016
By Victoria Andreeva and Polina Devitt
MOSCOW, June 14 Russia's Uralkali, the
world's largest potash miner by output, sees room for global
fertiliser prices to rise without attracting new competitors
into the market, its head of sales said.
Potential new rival BHP Billiton is mulling whether
to develop the 8 million tonne per year Jansen mine in western
Canada, which would become the world's largest potash
The few established producers in the market are holding
potash prices at $450-$500 per tonne, however, around three
times production costs but still low enough to act as a barrier
to new entrants, Uralkali's Oleg Petrov said in an interview.
Potential newcomers see an opportunity in a rising demand
for chemical fertilizers to feed a growing and increasingly
affluent global population.
But at current prices an investor cannot be sure that
greenfield projects can turn a profit, Petrov said. "To start
new production, potash prices should be more than $500 per tonne
at the mine gate and about $600 per tonne on the market."
BHP will make a final decision in its next financial year
starting July 1 on whether to go ahead with Jansen, which would
open in 2017.
Global potash producers are currently producing at around 80
percent of capacity to support prices. Uralkali's capacity
stands at 13 million tonnes per year, while it forecasts 2013
output of 9.5-10.5 million tonnes.
The company, controlled by Russian billionaire Suleiman
Kerimov, ranks second by capacity behind Canada's Potash Corp of
Uralkali sells its potash via Belarus Potash Company (BPC),
a joint venture with Belaruskali, and via subsidiary Uralkali
Trading S.A., a Switzerland-based firm.
The venture competes with Canpotex, its North American
equivalent, which has three members - Potash Corp, Agrium
The prospect of new competition from BHP could expose cracks
in the two groups, which account for 70 percent of global trade
in the potash market, sources said this week.
According to Uralkali, BPC is working well as a single
company in which Uralkali and Belaruskali join forces. "We
believe in the efficiency of BPC," Petrov said.
Uralkali dismissed market rumours that it was selling
outside the joint venture.
Petrov was also affirmed that by the end of the year BPC
would recover its market share, partly lost in some countries
including Brazil as it tried to support prices this year.
Uralkali's 2013 global potash demand forecast is 53-54
million tonnes, up from 51 million in 2012. Petrov, however,
sees upside potential to 55 million tonnes in 2013, rising to 57
million tonnes in 2014.
"The only worrying factor (in his forecasts) is the
situation in India, mainly its currency which has been highly
volatile recently," he said.
Petrov based his optimism on rising first-half demand in
India, China, Brazil and the United States. Europe was flat.
"The market has the potential to grow by 2 to 3 million
tonnes per year," Petrov said. It could reach the level of 60
million tonnes by 2015 or 2016, according to his estimate.
He expects a minor price and volume increase for the 2014
contracts with China and India, which account for around 15
percent of global demand.