Potash demand down, but not expected to stay there
Potash production has taken a hit in Saskatchewan as PotashCorp plans to temporarily shut down its mine in Lanigan and Brazilian mining company Vale has shelved plans for a mine near Kronau, but some analysts think this is only a temporary setback before another big boom in sales.
Marty Cej, managing editor and anchor with Business News Network (BNN), said the current decline in demand isn't a surprise, but he doesn't expect it to be a long-term trend.
"Drought in the United States is going to perhaps cause a spike in demand for potash over the next couple of years as farmers try to make up for the yields that were destroyed this year," he said.
In the meantime, Cej pointed out PotashCorp's temporary closure of the Lanigan mine doesn't come as a surprise to many.
"PotashCorp of Saskatchewan has long been very sensitive and very aggressive in trying to stay ahead of the supply/demand curve."
Right now, PotashCorp said it has too much product and not enough places to sell it. The Lanigan mine will be shut down between September 15th and October 13th.
Brazilian mining company, Vale, has decided not to proceed with its plans for a potash mine near Kronau, but Cej said this is not a permanent decision.
"(Vale) is an iron ore miner that also does potash. This shouldn't be taken as a sign by the people of Saskatchewan or Canada that this project won't be done at some point in the future. It's an indication that the demand for iron ore is affecting this particular company."
Another big player in Saskatchewan's potash market has yet to make a move based on the decrease in demand.
"A lot of analysts are waiting to hear whether BHP has the same sort of plan to shelve its project," said Cej of BHP Billiton's potential Jansen potash mine in Saskatchewan.
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