Canada’s Nutrien (TSX, NYSE: NTR), the world’s largest potash producer, will continue to increase production of the key crop nutrient despite a sharp drop in demand due to high prices, its chief executive said.
The Saskatoon, Saskatchewan-based company’s goal is to boost potash production capacity to 18 million tonnes by 2025, representing a 40% increase from 2020 levels, CEO Ken Seitz said during an earnings call.
The move seeks to ease an undersupply related to sanctions against Russia and Belarus, the second-and third-largest fertilizers producers after Canada.
“We have been prudent about expanding capacity, pacing it with the market,” Seitz said. “We continue to believe the supply-side challenges are real and there’s going to be a home for our volumes in the market.”
Fertilizer prices have soared after Russia’s invasion of Ukraine in February, which caused Nutrien’s sales in North America and Brazil, its top two potash markets, to drop in the September-quarter.
Nutrient is bullish on the underlying demand drivers for potash. It notes global fertilizer supply challenges persist, which creates a supportive environment for Nutrien into 2023.
“We expect potash supply from Eastern Europe will continue to be constrained in 2023, with shipments from Belarus projected to be down 40 to 60% and Russia down 15 to 30% compared with 2021 levels,” it said this week. “Global potash shipments are forecast between 64 to 67 million tonnes in 2023, with projected Nutrien potash sales volumes of about 15 million tonnes.”
The Canadian potash firm is not the only major player planning to expand production. BHP (ASX: BHP) decided in July to speed up construction at its $5.7 billion Jansen potash mine in Canada.
The world’s largest miner marked this week a project milestone, as it completed the excavation and lining of the two 1,000 metre deep shafts.
BHP had originally planned to kick off production at Jansen in 2027, but it is now aiming to bring online the first phase of four development stages a year earlier.
(With files from Bloomberg)
