VANCOUVER (miningweekly.com) – Two of the world’s largest crop nutrients companies, Potash Corporation of Saskatchewan and Argrium Inc, on Tuesday confirmed that they were engaged in discussions regarding a “potential merger of equals”.

Bloomberg News, citing unnamed sources, first reported Tuesday that the merger, which could be worth more than $30-billion, might be announced as early as next week.

The companies issued near identical statements saying “no decision has been made as to whether to proceed with such a combination, no agreement has been reached, and there can be no assurance that any transaction will result from these discussions”.

PotashCorp has a market capitalisation of about $14.6-billion and Agrium is valued at about $13.2-billion.

PotashCorp’s TSX-listed stock rose more than 12% on the news Tuesday to C$23.32 apiece, while Agrium’s stock, quoted on the same exchange, climbed as much as 8% to C$124.11 apiece.

Analysts believe that the potential merger could place the resultant company in a better position to deal with stubbornly soft potash markets.

Potash prices have fallen amid increased production, resulting in a market glut. Compounding this is farmers spending less on fertiliser amid abundant crops and lower agricultural commodity prices. Despite healthy demand in North America and Latin America, delayed contracts in China and India, as well as cautious buying patterns in other Asian markets, have weighed on shipments.

In its second-quarter earnings report, PotashCorp reported a further 44% year-on-year drop in the realised price of potash, a far cry from market prices fetching nearly $900/t in 2008.

Agrium also has a chain of retail shops in the US, which would improve PotashCorp’s access to farmers.

The major potash producers have been idling operations and laying off workers in dealing with the price declines. In July, rival Mosaic Co idled its 2.6-million-tonne Colonsay potash mine, in Saskatchewan, and PotashCorp in January closed its Picadilly, New Brunswick potash operations barely a year after opening it, citing a challenging macroeconomic backdrop.

Meanwhile, a wave of new production is expected to come online, most notably being Germany-based K+S Potash Canada, which is pushing ahead with its $4.1-billion Legacy potash project, also in Saskatchewan, which is on track to start producing potash before year end, and BHP Billiton’s $2.6-billion Jansen project, on which the company will likely make a formal construction decision in 2018/19.