Potash Corp does not expect change in Canpotex structure after Uralkali move
MOSCOW. Aug 8 (Interfax) - The CEO of Canada's Potash Corp, Bill Doyle said he does not expect any changes in the structure of Canpotex, the trading company for North American potash producers Potash Corp, Agrium and Mosaic, due to the recent announcement by Russian potash giant Uralkali that it would stop selling through Belarusian Potash Company (BPC).
Doyle, speaking in video conference call for investors, also said that Potash Corp does not intend to change its strategy. "Our business is going to function as normal. Our customers are with us 100 percent," he said.
He also believes the dispute between Uralkali and its partner in BPC, Belaruskali will not last long. Doyle recalled that there have been "battles" between Russia and Belarus on the potash market before.
In general, Doyle expects demand for potash to grow, driven by fundamental factors. He said 2013 begins a new growth cycle on the potash market that will last for the next few years. He said the company could see annual demand of 60 million tonnes, but the growth will not be due to lower prices.
"Potash is not like shoes. If you cut the price of potash in half, farmers are not going to take twice as much. They only need so much," Doyle said.
He also said Potash Corp is continuing negotiations with China's Sinofert on potash supplies and intends to sign a new contract at a fair price. Uralkali announced last week that it had reached an agreement with China's CNAMPGC for the delivery of an option under the contract for 2013. The amount will be 500,000 tonnes. The contract price was not specified, but Uralkali said the benchmark could be the price on China's spot market in the neighborhood of $350 per tonne.
Doyle also said that Potash did not plan to change its dividend or share buyback plans.
Uralkali shocked the market last week when it announced that it was halting exports through BPC and would instead be using a single export channel, Uralkali-Trading S.A.
The company said its "cooperation with its Belarusian partners was at a dead-end." Uralkali, which had always insisted that product from both producers be exported through the same marketing channel, had been undermined by the Belarusian presidential decree #566 that canceled BPC's exclusive right to export potash fertilizer. Following the decree's publication, Belaruskali began exporting product outside the BPC framework, Uralkali said.
