PhosCan Chemical Corp., which owns 100 percent of the Martison phosphate project in Hearst, Ont., said May 7 that it has received an unsolicited proposal from a third party which, if accepted, would result in a change in the company’s business strategy. The company said its corporate finance committee, along with its financial advisor, Cormack Securities Inc., will review the proposal, as well as other strategic alternatives, which are expected to be in the resource, agriculture, and infrastructure sectors.
PhosCan’s other primary asset is C$68 million of cash, cash equivalents, and short-term investments.
PhosCan had previously announced that it has deferred certain aspects of Martison’s development, with a view toward preserving cash for use in other corporate development activities (GM Dec. 21, 2009). At current phosphate prices, PhosCan recently said it would be some time before it would commence full-scale development of Martison (GM May 3, 2010).
There was no word from PhosCan as to the identity of the third party.
Agrium Inc., which plans to stop using its own phosphate rock mine in Kapuskasing, Ont., in 2013, had no comment. A company spokesman discounted any connection. “Keep in mind that we have plenty of phosphate rock at Kapuskasing, just not economic rock with the Canadian dollar where it is and challenges of the ore deposit.” Agrium has begun importing rock into the U.S. Gulf from Morocco to supplement supplies from Kapuskasing for its Redwater, Alberta, phosphate production plant. Agrium has had ore-content problems with Kapuskasing.
PhosCan has touted the quality of its rock, with its low level of impurities. It says it is suitable for both MAP and DAP production, and would require less sulfuric acid than competing phosphate producers. PhosCan had been thinking of building a processing plant in Canada, saying its location would allow it to easily serve the Western Canadian and U.S. markets, most notably the Northern Plains and northern Cornbelt.
Another major player looking for rock is The Mosaic Co., which recently acquired a stake in the Bayovar project in Peru. PhosCan has highlighted access to its material throughout Canada and the U.S., including a straight shot down the river system to NOLA. Mosaic has a phosphate processing plant at Faustina, La., and is considering sending rock from Peru to NOLA or Tampa.
The PhosCan board includes fertilizer industry veterans – retirees from Agrium and Cargill Inc. – John Yokley and Glen Magnuson, respectively, as well as Garry Pigg, formerly with IMC Global Inc. and Freeport-McMoRan.