Nutrien Will Temporarily Idle Potash Production in Saskatchewan

Canadian agricultural fertilizer producer Nutrien (TSX:NTR,NYSE:NTR) plans to halt potash production at three projects in Saskatchewan during the fourth quarter of 2019.

Nutrien, the largest global producer of potash, credits a short term slowdown in the global potash market with the Q4 production stoppage.

Last November, the Canadian producer permanently closed its New Brunswick potash plant after a strategic review of overall operations. The site was previously put on care and maintenance in 2016 and had not produced potash since.

As a result of the shuttered east coast facility, Nutrien reported a US$1.8 billion non-cash impairment for Q3 2018.

Currently, Nutrien operates six potash mines in Saskatchewan: Cory, Patience Lake, Rocanville, Lanigan, Vanscoy and Allan. The plan is to halt production at the latter three for up to eight weeks.

If all three potash facilities are idled for the full eight weeks, Nutrien estimates potash production could be reduced by approximately 700,000 tonnes and potash annual earnings before interest, tax, depreciation and amortization could be reduced by US$100 to US$150 million.

Annually, Nutrien produces and distributes 27 million tonnes of potash, nitrogen and phosphate.

“Despite the current short-term market conditions, we remain positive on potash demand for 2020, as well as the medium to long-term potash fundamentals,” notes the announcement. “We remain focused on a gradual ramp up of production to meet demand and to ensure we operate the safest, most reliable and efficient potash business in the world.”

It has been a challenging year for agricultural fertilizer companies. In late July, Nutrien reported remaining resilient despite experiencing the worst planting season in US history. This marks the second consecutive year in a row the company was affected by wet weather conditions on both sides of the US-Canada border.

Hard times aren’t limited to Nutrien either. Earlier this week, phosphate company Mosaic (NYSE:MOS) announced it was idling its Louisiana operations, reducing its output by roughly 500,000 tonnes this year. Pressure from other countries ramping up production has added to the global supply and weakened demand.

Nutrien expects the potash market to recover in 2020 and demand for the crop additive to grow as well.

Shares of Nutrien slipped 1.6 percent on Thursday (September 12), trading at C$67.72.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.