EuroChem AG, Zug, Switzerland, expects to produce less potash this year than previously planned, and is delaying the start-up of its second potash operation until the first half of 2019.
The group, which produced its first test tons of potash in March at its new Usolskiy operation south of Berezniki (GM March 16, p. 30), has said previously that it expected to produce between 500,000-600,000 mt of potash this year (GM Feb 9, p. 26; May 18, p. 27). Of this total, around 450,000 mt of finished product had been expected to come from Usolskiy, and the rest from the group’s second potash project, VolgaKaliy, in Russia’s southern Volgograd region (GM May 18, p. 27).
The group now expects to produce a total of 300,000 mt of potash in 2018, according to a Reuters report, citing EuroChem Chairman Alexander Landia.
Landia said the group will be “quite prudent” about ramping up projects, and wants to avoid disruptions to the market, believing “definitely” that potash prices will come under some pressure through the new projects coming on stream, according to the report. However, he did not provide any further elaboration on the planned change to Usolskiy’s ramp-up process or the delayed production start-up at Volgakaliy, nor had a spokesperson for the group responded to Green Markets inquiries by press time.
The start of commercial production at Volgakaliy was previously scheduled for before the close of this year. The site produced its first potash concentrate in July, and EuroChem in its third-quarter earnings report last week said commissioning of the flotation plant is continuing, and that the two skip shafts are connected and the cage shaft is being “finalized” (GM Nov. 9, p. 27). It also said full phase 1 production capacity of 2.3 million mt/y at Volgakaliy is expected to be reached in 2021-22, having previously indicated a 2021 target.
Once fully operational, Usolskiy’s Phase 1 will have a total annual production capacity of 2.3 million mt of MOP.
But, according to Landia, EuroChem is planning to produce more than 8 million mt/y of potash by 2024, which implies that the group is targeting the two operations reaching near their full ultimate combined capacity of 8.3 million mt/y by then.
Most of EuroChem’s output would be used initially by the company, with any spot sales replaced by long-term contracts when potash output reaches around the 2 million mt/y level, according to the report, citing Tom Luigs, global product manager for phosphates and potash at EuroChem’s trading arm.
The group expects global potash demand to grow at about 2 percent a year. Taking that average, the market needs 1.3 million mt of additional potash every year just to stay even, Luigs said.
Meanwhile, according to Landia, EuroChem’s plans to develop a natural gas-based nitrogen plant and distribution center in Louisiana, first announced in 2013, remain on hold (GM July 15, 2013). The group selected a site in St. John the Baptist Parish for the project in 2015 (GM May 4, 2015), but there has been more recent talk that the project is not a priority and may be off the table completely.