Potash Corp to add 2.7 million tonnes capacity on heightened demand for fertilizer
18 Jul 2008
Saskatoon: Potash Corporation of Saskatchewan Inc. (Potash Corp) has announced plans to add 2.7 million tonnes of potash capacity at three of its Saskatchewan facilities.
The capacity addition will be achieved through a new de bottlenecking project at Allan and increases in the scope of projects announced in 2007 for Cory and Rocanville. Work on all three projects is to be initiated shortly, which have a combined cost of $1.6 billion, and will bring Potash Corp's operational capacity to 18 million tonnes by the end of 2012.
The cost of the capacity expansion is said to be approximately 60 per cent lower than estimates for a comparable greenfield capacity. The projects will make the additional production available much more quickly than a new mine could be developed.
The projects 'piggy back' on a long-term potash capacity expansion program that includes completed work at Rocanville (2005), Allan and Esterhazy (2007) and Lanigan (2008), as well as in-progress construction projects scheduled for completion at Patience Lake (2008), Cory (2010), New Brunswick (2011) and Rocanville, Allan and Cory (2012).
Potash Corp president and chief executive officer Bill Doyle said that global potash demand is continuing to grow more quickly than increases in supply. Apparently, the world's increased demand for food and biofuel has pushed grain prices to record highs, fuelling both demand and prices for fertilizer, which is in tight supply.
''With our unmatched potash assets, we can provide a solution that is faster and more cost-effective than greenfield production. Since 2003 we've been investing in projects to raise previously idled capacity and then expand capacity at each of our mines, and these projects further support our long-term growth strategy. Our objective is to bring our valuable resources on stream to better serve our customers and meet global demand while delivering increasingly strong results for our shareholders,'' said Doyle.
Financing for all projects is expected to be from free cash flow.
The Allan de bottlenecking will add 1 million tonnes in annual production capability, raising its annual capacity to 3 million tonnes per annum. Construction and ramp-up are scheduled for completion by the end of 2012. The project follows a 400,000-tonne expansion that was completed in 2007, and has an estimated cost of $350 million.
At Cory, the new project will add another 1 million tonnes to the 1.2-million-tonne-per-year de bottlenecking and expansion project initiated in 2007. The initial project was scheduled for completion in 2010, with construction and ramp-up of the new project to be completed by the end of 2012. Cost of the additional work is estimated at $220 million, and will raise the facility's annual capacity to 3 million tonnes.
At Rocanville, another 700,000 tonnes of capacity will be added to the 2-million-tonne mine and mill project announced in 2007, at an additional investment of $1.0 billion. The project is now expected to add 2.7 million tonnes at a cost of $2.8 billion, raising the facility's annual capacity to 5.7 million tonnes. Construction is scheduled to be completed by the end of 2012 with ramp-up completion slated over the following two years.
