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* 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 (Reuters) - 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 of 2013.
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 possible.
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 said.
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 said.
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 2017. ($1=1.0302 Canadian dollars) (Reporting by Christiaan Hetzner; Editing by Greg Mahlich)