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SASKATOON, SK, May 2 /CNW/ - Potash Corporation of Saskatchewan Inc. (PotashCorp) announced today that it will begin a major debottlenecking and expansion project that will increase potash production at its Cory, SK operation by 1.2 million tonnes from 2006 levels. The project will cost approximately US $775 million, which includes US $70 million for 750,000 tonnes of new compaction capacity.
In 2006, Cory produced approximately 800,000 tonnes of its 1.37 million tonne nameplate capacity, and currently makes only white potash products primarily for industrial customers. The project will involve debottlenecking of underground operations as well as a significant expansion into the production of red potash products. A new plant will be constructed for the crushing, flotation, centrifuging and drying of 2.0 million tonnes per year of red products, with up to 800,000 tonnes of this to be crystallized for white product production. Additionally, storage, load-out and rail yard capabilities will be expanded to support the new red product line. Work is scheduled to begin immediately and will take 36 months to complete.
This will increase capacity at Cory to 2.0 million tonnes and, combined with other announced projects in Saskatchewan, should raise PotashCorp's total production capability to 13.5 million tonnes by the second quarter of 2010. Beyond this, the company is considering additional projects at its facilities in New Brunswick and Saskatchewan that could raise its potential capacity to 15.7 million tonnes by 2015.
With a 12-16 percent increase in potash consumption expected in 2007 and further 3-4 percent annual increases anticipated through the end of the decade, global potash producers - with the exception of PotashCorp - are at or near their production limits. A new conventional greenfield mine requires a good deposit, 5-7 years' lead time to build and, according to recent external engineering estimates, an investment of $2 billion for 2 million tonnes of production. This Cory project will bring expanded production tonnage online more quickly and at a 40-percent discount to the estimated cost of a greenfield development.
"We believe that the world will need more potash, and we are in the best position to meet that demand," said PotashCorp President and CEO Bill Doyle. "For almost 20 years, we have patiently managed our potash resources, recognizing that significant and sustainable growth in global consumption would eventually arrive. Our project at Cory demonstrates the continuing execution of our Potash First strategy, as we will be bringing back capacity and expanding our product mix to meet the growing requirements for potash in offshore markets."
PotashCorp is the world's largest fertilizer enterprise producing the three primary plant nutrients and a leading supplier to three distinct market categories: agriculture, with the largest capacity in the world in potash, third largest in phosphate and fourth largest in nitrogen; animal nutrition, with the world's largest capacity in phosphate feed ingredients; and industrial chemicals, as the largest global producer of industrial nitrogen products and with the world's largest purified industrial phosphoric acid production capacity.
This release contains forward-looking statements. These statements are based on certain factors and assumptions as set forth in this release, including foreign exchange rates, expected growth, results of operations, performance and business prospects and opportunities. While the company considers these factors and assumptions to be reasonable, based on information currently available, they may prove to be incorrect. A number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to: fluctuations in supply and demand in fertilizer, sulfur, transportation and petrochemical markets; changes in competitive pressures, including pricing pressures; risks associated with natural gas and other hedging activities; changes in capital markets; changes in currency and exchange rates; unexpected geological or environmental conditions, including water inflow; and government policy changes. Additional risks and uncertainties can be found in our 2006 financial review annual report and in filings with the U.S. Securities and Exchange Commission and Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this release and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. In the case of guidance, should subsequent events show that the forward-looking statements released herein may be materially off-target, the company will evaluate whether to issue and, if appropriate following such review, issue a news release updating guidance or explaining reasons for the difference.