Potash prices have risen slightly, prompting PotashCorp to rescind layoffs and Uralkali to cut production to keep supporting the price.

Canada’s largest potash producer, Potash Corporation of Saskatchewan (TSX:POT), is calling “ongoing tightness” in the potash market. 

According to Agrimoney, North American granular potash inventories have fallen to 2.35 million tonnes, their lowest since September 2012. The decline represents a year-on-year drop in production of 13.5 percent and is largely the result of producers scaling back output since the collapse of Belarusian Potash Company last July.

Alongside the tightness in the market, potash prices are showing some signs of recovery. Potash prices have climbed up to $350 per ton, which is progress from December, when prices had fallen by as much as 30 percent, to $310 per ton.

Strengthening prices have prompted PotashCorp to rescind layoff notices for 50 workers at the Penobsquis facility in New Brunswick. The layoffs date back to December, when the potash giant slashed 18 percent of its workforce on weak market sentiment.

While PotashCorp looks to add some more production to the market, its Russian counterpart Uralkali has cut its production target for the year by 8 percent. By reducing its projected volume from 12 million tons to 11 million tons, Uralkali is looking to support potash prices. Furthermore, as Bloomberg reports, the company will continue to consider market conditions when weighing its production levels.

When Uralkali parted ways with Belarusian Potash Company, the company had plans to operate at full capacity in order to regain its market share. According to Uralkali’s CEO, Dimitry Osipov, market share is important, “but we don’t want prices to fall.”

For its part, Uralkali anticipates seeing global potash sales this year reach a record of 58 millions, which would be indicative of “very good” demand.

Company news 

Allana Potash (TSX:AAA) provided an update on its Danakhil project in Ethiopia, highlighting the significant progress it has made so far this year in terms of critical pre-construction work, including technical optimization studies, bank debt financing and infrastructure development.

The company also notes that it has received an exclusive water extraction permit that is sufficient for more than 1 million tons per year of MOP production. Furthermore, it is continuing with a technical program and testing with strategic partner ICL.

Allana’s next steps will be to advance all the critical aspects of the project that require attention.

Gensource Potash (TSXV:GSP) released the results of a preliminary seismic review at its Lazlo project area. They confirm data available in historical well logs, as well as the company’s overall outlook on the area with respect to potash bed presence, total Prairie salt thickness and depth to Prairie salt.

The company initiated the program to purchase and reinterpret existing trade data within the project area.

Gensource’s president and CEO, Mike Ferguson, explained in a company statement, “the results of the seismic interpretation confirms our understanding of the Prairie Evaporite Formation in the Lazlo area. Lazlo was chosen as our area of focus due to the expertise and understanding of the potash deposit within Gensource in what has been called the ‘Davidson Sub-basin.’ We are very pleased that the seismic data analysis in the area confirms our view of the local geology as accurate and that the area is prospective in its ability to host new potash developments. We will continue to define and confirm the potash endowment in the Lazlo project area and issue a revised 43-101 report following a planned confirmation drill hole.”

Last week, Potash Ridge (TSX:PRK) was notified of the Utah Division of Water Quality’s (UDWQ) intention to issue a Ground Water Discharge Permit for the company’s Blawn Mountain sulfate of potash project in Utah. The UDWQ agrees that water drained from the intended tailings facility at the project is of similar quality to the receiving ground water.

Per the company’s press release, “[p]rotection of ground water will be insured under this permit by regular sampling and analysis of both the tailings water and ground water down gradient from the tailings area and impoundments.


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


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