Potash Corp. of Saskatchewan Inc. (PotashCorp) has announced a significant potash price increase in the new Canpotex/Sinofert agreement.
According to a Potash Corp. press release, Canpotex Ltd., which is the offshore marketing company for Saskatchewan potash producers, and Sinofert Holdings Ltd., a leading fertilizer enterprise in the People’s Republic of China (PRC), have reached agreement on 2008 potash pricing at US $400 per tonne higher than in 2007. Canpotex has prorated China’s 2008 volumes and, as a result of the timing of this settlement and unprecedented demand in other markets, has only 1 million tonnes that it can commit to Sinofert through the remainder of this year.
The Canpotex/Sinofert agreement is pursuant to the 2007-2009 Memorandum of Understanding that exists between the two companies. Canpotex ships primarily red standard grade potash to China, but also supplies certain amounts of white standard grade and granular product.
"Significantly higher potash prices and extraordinarily tight supply have become much more firmly entrenched since China’s previous contract was signed 14 months ago," says Bill Doyle, PotashCorp president and CEO. "With the intense pressure on global food production and continued growth in potash demand, this is the reality for our industry for the foreseeable future. This settlement highlights the importance of securing supply in an increasingly tight market. As the world’s largest potash company, we are committed to raising our capability to meet long-term growth in demand and we intend to capture the benefits for our shareholders as we do so."
Canpotex is the offshore marketing company jointly owned by three Saskatchewan potash producers: PotashCorp, Agrium, and Mosaic. PotashCorp, under a pro rata agreement based on capacity, is currently entitled to supply approximately 54 percent of Canpotex’s potash requirements. PotashCorp also owns 20 percent of Sinofert, the largest distributor of fertilizer products in the PRC. Sinofert is also a major producer of phosphate-based fertilizer products and holds an 18 percent interest in the country’s primary potash producer, Qinghai Salt Lake Potash Co., Ltd.