Hard-hit potash miners aim to cut, barter their way to better times

By Rod Nickel
March 1 (Reuters) - Drastic moves by potash producers, from
idling mines to bartering with farmers, may pay off soon for the
hard-hit industry, company executives said on Tuesday.
Potash Corp of Saskatchewan POT.TO , the third-largest
potash producer, expects demand for the crop nutrient to pick up
after significant supply cuts, Chief Executive Jochen Tilk said
on Tuesday.
"We're now at the point where we expect that there be a
response from the market," Tilk said at a BMO investor
conference in Hollywood, Florida, but added that it's too soon
to say if more cuts are necessary.
Potash Corp in January shut down its newest mine in New
Brunswick, Canada, and last week announced temporary shutdowns
at two other Canadian mines.
Canpotex Ltd, the export potash sales agency for Potash,
Mosaic Co MOS.N and Agrium Inc AGU.TO , has reduced
first-half export plans by 1.5 million tonnes, representing
nearly 8 percent of Canpotex's estimated 2015 sales.
Farmers' limited access to credit in Brazil, a key importer
of potash used to nourish corn and sugarcane crops, has hurt
demand there, said Mosaic Chief Executive Joc O'Rourke, speaking
at the conference.
So Mosaic is bartering with Brazilian farmers, allowing them
to use crops as collateral to borrow money for fertilizer
purchases, he said. Agribusinesses Archer Daniels Midland Co
ADM.N and Cargill Inc CARG.UL are Mosaic's counterparties in
the transactions.
"We're starting to see potash move," O'Rourke said. Barter
is becoming a more popular form of credit in Brazil today, he
said.
Potash Corp expects global potash shipments to climb from a
range of 59 million to 62 million tonnes this year to 70 million
by 2020.
To be sure, Indian demand is "a perpetual disappointment,"
Tilk said, and lower U.S. farm incomes have limited farmers'
spending power, although fertilizer makers say their products
remain affordable.
While Potash Corp is cutting some capacity, it is also
expanding its largest mine. Agrium is increasing output and K&S
AG SDFGn.DE and EuroChem are building new mines.
Potash sells for under $300 per tonne in the U.S. Midwest,
down from nearly $450 per tonne a year ago, according to data
published by Raymond James.
Shares of Potash and Mosaic rose 2.4 percent and 1.9
percent, respectively, in Tuesday morning trading in New York.