The world's potash industry imploded today as Russia's Uralkali withdrew from the Belarus Potash Corporation one of two global potash cartels that control about 70% of the world's potash production. Stock prices of the companies in the other joint venture, North American-based Cantopex, fell around 25% on the news, due to fears that Uralkali, one of the lowest cost producers in the world would drive down prices. News reports indicated that it would cause a noticeable drop in the GDP of Canada.Speculation immediately turned to the potential negative impacts on the many potash projects underway around the world, including those in Arizona.
David Salisbury, Chairman of Passport Potash, one of three companies actively exploring the Holbrook basin of eastern Arizona, was interviewed on BNN (Business News Network) today [right] and offered a more positive assessment of the situation. David noted that Passport would still be economic at the new world price of $300 per ton, or possibly even lower, that the company has one of the lowest capitalization costs of any new mine with a major market in the US that they are well positioned to service, that the Russian action might be primarily a ploy in high stakes negotiations over potash contracts, and that the Passport mine wouldn't come into production until 2018, giving time for lots of developments to change the markets.
I tend to agree with his assessments. In addition, there are many more projects proposed around the world than demand requires. So, if the higher cost operations fall by the wayside, it could make the Holbrook basin more competitive.
The situation is complex and still unfolding.The outcome is not foregone.
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