By Leo Quigley, AJOTWhile major Canadian industries, such as British Columbia’s lumber industry, are struggling with the downturn in the US economy and the lower value of the American dollar, the Potash Corporation of Saskatchewan (PotashCorp) is on a roll. Headquartered in the Province of Saskatchewan, PotashCorp is easily the largest producer of the nutrient-rich fertilizer in a world where developing countries are searching for ways to increase crop yields to supply their population’s growing demand for protein.
With the skyrocketing growth in world market Rhonda Spiess, spokesperson for PotashCorp told AJOT that the downturn in the US and the lower US dollar have not had a dramatic effect on PotashCorp. “Our business is a little different than most,” Speiss said. “We sell products across the globe and, right now, the demand for food that is growing. As such, the demand for our products has been increasing.” The increased demand for fertilizer is coming primarily from regions such as China, India and Southeastern Asia, she said. “Those countries have been seeing higher GDP growth than they ever have and, as such, they have more money in their products and they want to eat better. They’re looking for diets that are higher in protein which means producing more animals that eat more grain, which is pushing the price of grains up,” Speiss said. “As farmers are seeing higher prices for grain they’re motivated to use more fertilizer to increase they’re yields.” While the increasing demand for food worldwide is the main reason for growth in the PotashCorp’s business, the increasing demand for crops used in the processing of ethanol and biodiesel is “the icing on the cake” for the corporation, she said. Illustrating the growth in the demand for fertilizer, last year PotashCorp had sales of 9.4 million tons that was 31% higher than in 2006. Next year, Speiss said, the corporation is expecting to produce 10 to 10.5 million tons. In addition to potash the corporation also sells nitrogen and phosphate products worldwide, produced at plants throughout the US, Trinidad and Brazil. Because of this increasing world demand for potash the corporation is in the process of carrying out several mine expansions and “debottlenecking” projects. The term debottlenecking applies to mines that have potash reserves that, at a higher market value, can now be developed. Speaking to the Goldman Sachs 12th. Annual Agricultural Biotech Forum on February 12 of this year, Bill Doyle, PotashCorp president and CEO said, “Continued growth in demand has pushed the potash industry to its production limits. Companies have announced plans to debottleneck current operations to create capacity, but this is not expected to meet the projected growth in demand. “No significant greenfield projects have been announced, so the global potash supply situation appears to be tight for at least the next five to seven years. We view this as an ideal window to bring back long-idled capacity and expand our production.” PotashCorp owns and operates five mines in Saskatchewan and one mine in New Brunswick. Two other companies, Agrium and Mosaic, also operate mines in the province. In 2006, North America remained as the corporation’s largest market, followed by Brazil and China. In North America, Carlsbad, New Mexico, was the earliest provider of potash (potassium), as were Utah and California. However, in the 1960’s Saskatchewan’s potash mines, drilled into the sediments that were left behind by Lake Agassiz - that once covered much of central North America - began supplying high analysis natural potash from its massive reserves near the City of Saskatoon. Now, PotashCorp, together with two smaller Saskatchewan mines, supply roughly three-quarters of the potash used in US crop production. The province’s reserve of potash has been estimated at 67 billion tons or 40% of the wo