Optimism Reigns over Potash

- June 9th, 2010

Potash has attracted a lot of attention from analysts since the nutrient rose from relative obscurity, worth around $150 per tonne, to a hot commodity that rapidly rose to hit $1000 per tonne. As the price of the crop nutrient skyrocketed, some bold investors profited handsomely.

By Leia Michele Toovey- Exclusive to Potash Investing News

 potashPotash has attracted a lot of attention from analysts since the nutrient rose from relative obscurity, worth around $150 per tonne, to a hot commodity that rapidly rose to hit $1000 per tonne.  As the price of the crop nutrient skyrocketed, some bold investors profited handsomely.  Now, since the recession hit, the values of potash producers stock and the nutrients selling value did in fact suffer, but fortunately the interest in potash investing has remained.

Potash has been slow to rebound; however, on the positive side of things it has not been subject to the recent volatility that other commodities such as copper have witnessed. Still, though, the investment community remains divided on whether or not potash stocks are a good investment.

UBS Securities was the most recent investment firm to state its opinion on the potash market. The Swiss firm upgrade shares of Potash Corporation of Saskatchewan (NYSE:POT) from neutral to buy, citing strong market fundamentals. Analyst Brian MacArthur believes crop prices could improve further, “especially if China emerges as a substantial importer,” or if demand for corn increases among ethanol producers, according to a research report by the analyst on Wednesday.

BHP Billiton Ltd., (NYSE:BHP) the world’s biggest mining company, said it expects potash prices will be high enough to allow for development of new mines in Canada. “We’ve had a long-term view on price for a period of time that supports the projects we’re talking about,” Graham Kerr, the Australian company’s president of diamonds and specialty products, said today at a conference in Toronto. BHP is studying development of potash reserves in Saskatchewan, where it forecasts that production from its proposed Jansen mine may begin in 2015. BHP  is leaning toward development of its own potash reserves rather than acquiring a producer, Kerr said at the RBC Capital Markets conference. BHP plans to decide by late 2011 on whether to proceed with construction of Jansen.

Still, many analysts are not on board with what current, and future, producers are saying. Many fear jumping on board, claiming that persisting economic concerns in debt stricken Europe will hold back the nutrient from rallying.

Company News

Just a week after Dmitry Rybolovlev’s announced his intention to sell his controlling stake in Russian Potash producer Uralkali, a potential buyer has stepped forward, Suleiman Kerimov. Mr. Kerminov is reported to be in talks to buy all, or the majority of, Dmitry Rybolovlev’s stake in Russia’s number two potash producer Uralkali. The current market capitalization of Uralkali is US$8 billion.

Europe’s biggest potash producer is considering selling its home and garden fertilizer unit, and directing all of its attention into potash and salt. K+S AG, (Xetra: xe:SDF) said in a statement, that the home and garden fertilizer industry is highly competitive, and fragmented. By selling this unit, the firm would be able to focus on its potash and salt business.  The Kassel, Germany-based company will plan in the next few months “a possible carve-out” of the unit. K+S became the world’s largest salt producer following the purchase of Morton Salt from Dow Chemical Co. last year, a transaction that will add more than 500 million Euros to revenue this year. K+S is also interested in pursuing acquisitions in both potash and salt.

Western Potash Corp. (TSX: WPX, ETR: AHE) has received their NI 43-101 compliant resource estimate for its Milestone property in southern Saskatchewan. The updated resource estimate provided the company with significant upgrades on their potash resource at Milestone. The resource now holds 41 million tonnes of measured resource, 133 million tonnes of indicated resource, and 560 million tonnes of inferred resource.  The wholly-owned Milestone property, comprising 500 square kilometers, is located 30 kilometers southeast of Regina and Mosaic’s Belle Plaine Mine, one of the largest producing potash solution mines in the world. The geology also makes it a suitable candidate for economical solution mining extraction.

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14 responses to “Optimism Reigns over Potash

  1. This publication is very biased and has a “for profit” motive in pushing a bushelbasket full of weak RE companies.   In particular, they disregard and under publish the  vertically integrated strategy of Great Western.  Moreover, they under report the importance of Critical Rare Earth Oxides and those companies that will have the capacity to produce them in quantity.   Lifton is right on the money … most of the RE companies will fail within the next 3 – 5 years, with only a few becoming profitable.   Great Western lead the pack in this regard.

  2. This publication is very biased and has a “for profit” motive in pushing a bushelbasket full of weak RE companies.   In particular, they disregard and under publish the  vertically integrated strategy of Great Western.  Moreover, they under report the importance of Critical Rare Earth Oxides and those companies that will have the capacity to produce them in quantity.   Lifton is right on the money … most of the RE companies will fail within the next 3 – 5 years, with only a few becoming profitable.   Great Western lead the pack in this regard.

  3. Because of the +10 year process of figuring out the unique metallurgical code  of each mine, it is hard to entice investors. This may be a the when government needs to get involved. It is up to the public sector. I believe that the process can be speeded up using innovation training and a highly trained crew. Few Western colleges teach REM, even at the PhD level. We might need to develop apprenticeship programs. Keep in mind, $5 billion in REM leverages $4 trillion in product. Everyone’s portfolio will take a hit as China retreats from exporting. They are tired of “selling gold for the price of cabages. I am forming a network to deal with these issues. Care to join?

    1. Yes I would, though I’m not realy into these technologies. What’s the scope of your network, what kind of expertise would you need?

  4. Because of the +10 year process of figuring out the unique metallurgical code  of each mine, it is hard to entice investors. This may be a the when government needs to get involved. It is up to the public sector. I believe that the process can be speeded up using innovation training and a highly trained crew. Few Western colleges teach REM, even at the PhD level. We might need to develop apprenticeship programs. Keep in mind, $5 billion in REM leverages $4 trillion in product. Everyone’s portfolio will take a hit as China retreats from exporting. They are tired of “selling gold for the price of cabages. I am forming a network to deal with these issues. Care to join?

    1. Yes I would, though I’m not realy into these technologies. What’s the scope of your network, what kind of expertise would you need?

  5. Again, no mention of Stans Energy (TSXV:HRE), who will have a processing plant and mine running in 2012. I guess Lifton doesn’t get any kickbacks from them so they don’t get mentioned.

  6. Again, no mention of Stans Energy (TSXV:HRE), who will have a processing plant and mine running in 2012. I guess Lifton doesn’t get any kickbacks from them so they don’t get mentioned.

  7. keep in mind too that Lynas has access to other Aussie mines that have large deposits of HREE’s. IMO these smaller mines could be a supply to Lynas or Lynas could take them over.

    Lynas also has other mines not developed like Crown and this has billions of dollars worth of Niobium

  8. keep in mind too that Lynas has access to other Aussie mines that have large deposits of HREE’s. IMO these smaller mines could be a supply to Lynas or Lynas could take them over.

    Lynas also has other mines not developed like Crown and this has billions of dollars worth of Niobium

  9. You might consider Northern Minerals Ltd in your list of HREE ! Huge liklihood of a very big deposit in Western Australia/Northern Territory boarder. Yes, do have a look attheir web site!

  10. You might consider Northern Minerals Ltd in your list of HREE ! Huge liklihood of a very big deposit in Western Australia/Northern Territory boarder. Yes, do have a look attheir web site!

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