Nutrien Ltd., Saskatoon, said March 16 that in response to the uncertainty of potash supply from Eastern Europe it plans to increase potash production capability to approximately 15 million mt in 2022, an increase of nearly 1 million mt compared to previous expectations. The majority of additional volume is expected to be produced in the second half.
“Our thoughts and sympathies are with those impacted by the crisis in Ukraine, and we hope for an immediate de-escalation of this conflict,” said Ken Seitz, Nutrien’s Interim President and CEO. “The impacts of this conflict extend beyond Eastern Europe, as a disruption in supply of key agriculture, fertilizer, and energy commodities could have implications for global food security.
“Nutrien is responding to this period of unprecedented market uncertainty by safely expanding potash production to help provide our customers with the crop inputs they need,” he added. “We continue to closely monitor market conditions and will evolve our long-term plans to ensure we utilize our assets in a safe and sustainable manner that benefits all our stakeholders.”
Last month, Nutrien gave a 13.7-14.3 million mt production estimate; however, at the time, it said production could be boosted another 500,000 mt if demand warranted (GM Feb. 18, p. 1). Nutrien reported potash capacity of over 20 million mt/y, with another 5 million mt available via lower cost brownfield expansion.
Nutrien said its 2022 potash production is expected to increase by nearly 20 percent compared to 2020 and account for more than 70 percent of global production added over this period. “We expect a small increase in our 2022 capital expenditures and will be hiring additional employees across our network of low-cost potash mines in Saskatchewan,” the company said.
The extra tons from Nutrien may not be nearly enough to meet demand. Sanctions on major producers means there could be a shortage. Second-ranked producer Russia may face sanctions due to its invasion of Ukraine, while third-ranked Belarus has already been cut off from global markets. That leaves Canada scrambling to supply agriculture powerhouses like Brazil, the biggest importer. The northern nation already supplies nearly all of the potash used in the U.S.
“Nutrien’s move to add 1 million mt of capacity, while sorely needed by the market, does not come close to fixing the supply gap if both Russia and Belarus are sanctioned out of the global potash trade,” said Alexis Maxwell, Green Markets Director of Research.
Russia and Belarus together supply about 42 percent of the $35 billion global potash trade, or some 24 mt annually, Maxwell said.
Two other large potash buyers, China and India, stepped up last month to lock in 2022 imports from Canada at $590/mt CFR (GM Feb. 18, p. 14).