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Nutrien to Permanently Close Maritime Potash Facility
As a result of the shuttered east coast facility, Nutrien will post a US$1.8-billion non-cash impairment for Q3 2018.
Canadian potash producer Nutrien (TSX:NTR,NYSE:NTR) will permanently close its New Brunswick potash plant following a strategic review of the company’s portfolio.
The Maritime plant was put on care and maintenance in early 2016 and has not produced potash in the time since. As a result of the shuttered east coast facility, Nutrien will post a US$1.8-billion non-cash impairment for Q3 2018.
The company will now focus its attention to its ongoing potash projects in the prairies.
“The decision to close the New Brunswick potash facility reflects Nutrien’s ability to increase potash production in Saskatchewan at a significantly lower operating and capital cost than resuming production in New Brunswick,” noted the press release.
Despite the financial impact of the closed plant, Nutrien reported its potash sales were in fact up 17 percent year-over-year to 3.86 million tonnes. Increased North American demand helped contribute to the growth as well as an improved potash price, which was up 19 percent in the third quarter to US$212 per tonne.
“In the third quarter, Nutrien delivered solid operating results,” Chuck Magro, president and CEO, said in the announcement. “Retail earnings increased by 10 percent year-over-year while our nutrient production operations reported higher volumes, margins and significantly lower costs.”
The potash producer was also able to finalize the sale of its stake in the Arab Potash Company for US$502 million. The company is also actively divesting from Sociedad Química y Minera de Chile (NYSE:SQM). Top Chinese lithium producer Tianqi Lithium (SHA:002466) will purchase Nutrien’s series A shares in the company by the end of the year.
“Nutrien has also raised its annual guidance due to the strength of market fundamentals and acceleration of merger synergies,” said Magro.
The price of potash is expected to continue to trend higher due to strong demand and tight supplies. There has already been a 20-30 percent increase in price compared to the same period last year.
Shares of Nutrien were slightly up on Tuesday (November 6), trading at C$75.02.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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