REGINA – The Saskatchewan government says it is premature to comment on a possible drop in the price of potash.
Uralkali, one of the world’s largest potash producers, said Tuesday it has decided to stop its export sales through the Belarusian Potash Company and direct all export volumes through its own Uralkali Trading.
Traders interpreted the breakup of the European potash cartel as a sign that Uralkali will be able to drive down the price of potash, affecting other rival producers in Canada and the United States.
In a statement, the Saskatchewan government said “it is too soon to know the potential impact of today’s announcement … on price, production and provincial potash revenues.”
“We will be monitoring these developments closely and speaking with Saskatchewan potash producers to gain a better understanding of the potential impact.”
The statement goes on to say the potential impact on provincial coffers will be reflected in the first quarter financial report which will be released next month.
At $520 million, Potash represents about 4.5 per cent of the government’s estimated 2013-14 revenues.
Analysts say the change in Uralkali’s policy could drive the price of potash down to under US$300 per ton.
Potash has been selling for close to US$400 per ton.
Shares in Saskatoon-based PotashCorp (TSX:POT) have fallen almost 21 per cent in trading on the TSX. Shares in Agrium (TSX:AGU) are down 4.73 per cent while in New York, Mosaic (NYSE:MOS) was off by just over 21 per cent.
All three companies have major operations in Saskatchewan, which has one of the largest potash deposits in the world.
The pink mineral is a main ingredient used in fertilizers to promote crop growth.
With files from The Canadian Press