Mosaic Curtails Esterhazy Production

The Mosaic Co., Plymouth, Minn., announced Oct. 10 it will temporarily curtail production at its Esterhazy mine, which, when combined with a previously announced potash curtailment, brings its total potash curtailments to up to 600,000 mt. It cited increasing inventories as a result of the short-term slowdown in global potash markets and increased risks of a delay in settlement of the Chinese supply contract for the increased curtailment.

Mosaic said the curtailment is not expected to impact the pace of development at the Esterhazy mine K3 project. If the full amount of the curtailment is realized in lower fourth quarter sales, it would result in a negative impact of approximately $150 million in adjusted EBITDA, it said.

“While near-term fertilizer markets remain challenging, we continue to expect a very strong application season in Brazil and North America, and a better supply and demand balance in 2020,” said Mosaic President and CEO Joc O’Rourke.

The company switched out higher-cost production at its 2 million mt/y Colonsay mine for production from the new Esterhazy K3 mine in August (GM Aug. 9, p.1).

In August, it also moved down its full-year potash sales volume expectations to 8.7-9.1 million mt from 9-9.4 million mt (GM Aug. 9, p.1). At that time, the company forecast its third-quarter potash sales volumes at 2.2-2.4 million mt. Potash sales volumes for the first six months of 2019 were 4 million mt.

Mosaic said this week it plans to provide updated market commentary when it reports earnings, after market close Nov. 4, 2019.

O’Rourke, in recent conversation with analysts at Sanford C. Bernstein & Co., said current potash prices don’t justify new investments and believes producers “will act rationally” to keep the market tight, according to a Bloomberg report.

K+S, Uralkali, Nutrien Ltd., and Belaruskali have all announced production cut-back plans in recent weeks.

K+S said on Sept. 23 it was reducing production of potassium chloride by up to 300,000 mt by the end of 2019 in response to current weak demand (GM Sept 27, p.14). The company had said in July it would extend a maintenance period planned for September at the Bethune potash plant in Saskatchewan to a total of two weeks (GM July 26, p.14).

Uralkali announced production cut-back plans for the second-half of the year on Sept. 20 (GM Sept. 20, p.1; Sept. 27, p.14), which followed announcements earlier in September by Nutrien (GM Sept. 13, p.1; Sept. 27, p.14) and Belaruskali (GM Sept. 6, p.14; Sept. 27, p.14) to cut potash output.

Israel Chemicals Ltd. (ICL) reported at the end of July the company planned a three-week shutdown for a plant upgrade at the Dead Sea site towards the end of this year, which would take out about 180,000 mt of ICL’s overall output and sales in the second half of this year (GM Aug. 2, p.28). The Israeli company typically takes the plant offline for just one-week for maintenance.