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TORONTO (miningweekly.com) – Two of North America’s largest potash and fertiliser producers, Canada’s Potash Corp of Saskatchewan and US-based The Mosaic Company, have improved their first-quarter earnings on the back of better prices and lower costs.
Following a period of “especially robust” potash markets, demand and pricing in spot markets eased slightly during the three months ended March 31, prompting both miners to warn that potash prices could slip lower later in the year.
“With a strong second-half to refill and to meet the growing demand we’re seeing in India and China, we think we’re going to go into a tight potash market in the second-half. And there could be some constraints in terms of supply relative to what we anticipate to be higher demand,” Mosaic president and CEO James Prokopanko said during the company’s analyst teleconference.
Both companies said they expected to ship up to 60-million tons of the crop-nutrient potash this year, underpinned by weaker prices and strong underlying agricultural consumption needs.
Early indications had led Prokopanko to believe that the potash-marketing cartel, comprising PotashCorp, Agrium and Mosaic, would sign a contract with India before June.
Potash prices had in recent years declined as a result of soft demand, growing supplies and the breakup in 2013 of Belarusian Potash Company (BPC). The break-up of BPC, a joint venture between Russia's Uralkali and Belarussian partner Belaruskali, left Canpotex as the dominant global potash export venture.
For the three months ended March 31, Mosaic reported net earnings being up 36% year-on-year at 294.8-million, or $0.80 a share. Net sales rose 8% to $2.1-billion.
PotashCorp reported first-quarter earnings of $370-million, or $0.44 a share, up 9% over the $340-million, or $0.40 a share, in 2014’s first quarter. Sales totalled $1.67-billion, slightly less than that of the same period a year earlier.
The company lowered its full-year earnings outlook to between $1.75 and $2.05 a share, down from $1.90 to $2.20 a share forecast previously, citing recent changes to potash taxes in Saskatchewan and other taxes for 2015 to total 20% to 22% of its potash gross margin.
For the second quarter, PotashCorp forecast a lower earnings range of between $0.45 and $0.55 a share, below analyst expectations of $0.57 a share for the current period.
For the current quarter, Mosaic expected to sell 2.3-million tonnes to 2.7-million tonnes of phosphates, compared with 2.6-million a year earlier, at $425/t to $450/t for diammonium phosphate. The company expected to sell between two-million tonnes and 2.4-million tonnes of potash during the current quarter, down from 2.5-million a year earlier, at between $265/t and $290/t.