K+S Group last week reiterated its 2.9 million mt/y potash production target for the Bethune mine in Saskatchewan, but it now expects it will be achieved in the second half of the current decade rather than as originally planned for 2023, K+S Chairman Burkhard Lohr told participants at BMO’s 16th Annual Farm to Market Virtual Conference on May 20.
Bethune produced almost 2 million mt of potash last year for the first time (GM March 12, p. 28), and according to Lohr, the operation is currently producing at that annualized rate. The mine has a nameplate capacity of about 2 million mt/y.
Most, if not all, of the anticipated capacity increase – some 900,000 mt/y – will come from secondary mining at the site. K+S first started secondary mining at Bethune in 2019, using what it described at the time as “new technology” for the company (GM May 17, 2019).
Meanwhile, granulation capacity at Bethune is still in ramp-up and K+S is shipping all of the granular tons produced there, including to the Brazilian market, according to K+S CFO Thorsten Boeckers speaking to analysts at a company first-quarter earnings call on May 11 (GM May 14, p. 34).
In addition to the Brazilian market, K+S is shipping granular product from Bethune to the U.S. It sent close to 100,000 mt to the U.S. market in 2020, and expects to double the volume this year.
“We will end 2021 with a volume something slightly more than 200,000 mt,” Boeckers told analysts at the company’s earnings call. That 2021 volume figure was also reiterated by Lohr at the BMO conference.
The CFO said that is the maximum the company can do to the U.S. for the time being.
K+S, however, declined to comment to Green Markets earlier this month on how much granular potash the company is currently producing at its Canadian mine, or to confirm what were its future granular capacity volume plans. But a spokesperson for the company insisted there were no “issues or problems” with Bethune’s granulation capability.
Last week, Lohr reminded that under the original set-up for the Bethune project, K+S was thinking in terms of some 500,000 tons per annum of granular potash going into the U.S. market from Canada. He said that is still K+S’s plan, but “this time without an external sales force.”
K+S back in 2015 had inked an agreement with Koch Fertilizer Trading Sarl, an affiliate of Koch Fertilizer LLC, for the supply of granular potash from Bethune to Koch’s U.S. customers (GM Aug. 18, 2015). Under the deal, it was planned to eventually ratchet up the supply volume to 500,000 st/y, or 453,000 mt/y. But in May last year, the two parties mutually agreed to terminate their exclusive marketing agreement, citing market fundamentals (GM May 22, 2020).
“We believe we can do it with our own sales force, and we should be there at the latest three years from now. We should be able to deliver to the U.S. a stable 500,000 tons a year,” Lohr told BMO conference participants.
He reminded that in addition to Bethune’s granulation capacity, logistics is also an issue delivering tons from Bethune to the U.S. market, but he said in two-to-three years, “we should be able to rail 500,000 tons anywhere [in that country].”
But Lohr emphasized there would be no “cannibalizing” tons destined for Brazil to get to that future U.S. volume number.