(Bloomberg) — Mosaic Co. is shutting two shafts at its flagship potash mine in Canada nine months ahead of schedule, a move that will reduce output just as prices for the key fertilizer ingredient are soaring. Shares fell the most in a month.
Mosaic already planned to close its K1 and K2 shafts at its Esterhazy mine in a shift to a newer mine being built at the Saskatchewan site, but “a recent acceleration of brine inflows” forced their early shutdown, the Tampa, Florida-based fertilizer producer said Friday in a statement. The third Esterhazy mine, K3, will replace the two shafts that have supplied potash to global customers for decades.
Mosaic’s potash production will be reduced by about one million metric tons during the expected transition period from July to next March, the U.S. company said. That would equal about 1.5% of the world’s potash production, based on Canadian government estimates of 66.2 million tons of global output in 2019. Canada is the world’s largest potash producer, accounting for almost a third of the world’s total.
This months-long loss in production “could not come at a worse time” for Mosaic or the industry, Ben Isaacson, an analyst at Scotiabank, said in a note. Potash prices and margins are well above mid-cycle levels, and the industry is sold out for months ahead. Operating rates are at the highest levels the industry has seen since 2007, he said.
Mosaic shares fell 4.8% to $35.61 at 10:59 a.m. trading in New York, its biggest intraday decline since May 4.
Mosaic plans to resume production at its Colonsay site east of Saskatoon, Saskatchewan, and recall workers as soon as practical to offset lost output from the early closure of the Esterhazy shafts, the company said. Annualized potash production could increase by 2 million metric tons from 2020 levels by March 2022 as Esterhazy’s third shaft ramps up to full capacity and Colonsay returns to service, Mosaic said.
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