Potash and COVID-19: Who’s Reacting and How?

- March 30th, 2020

To help investors navigate the current market, INN has gathered responses from potash companies to the ongoing COVID-19 crisis.

The coronavirus outbreak has shocked the financial world, injecting uncertainty into markets and driving economies to the brink of recession.

It seems every sector has experienced some sort of disruption as a result of COVID-19, with some feeling the impact of country shutdowns and broken supply chains more than others.

The potash space was optimistic about this year’s potential after 2019 proved challenging for the agriculture additive industry. However, much of that excitement has now turned to apprehension about the length and lasting toll of the global pandemic.

 

Investing During the Pandemic

   
The latest on what experts see coming for resources and commodities amidst the Coronavirus pandemic.
 

To help investors navigate the unprecedented uncertainty in the current market, the Investing News Network has gathered a list of responses from potash companies to the COVID-19 crisis.

All news and data were current as of March 30, 2020. This article will be updated as new information becomes available — if you know of a potash company that has issued a response to COVID-19 but is not listed, please email editorial@investingnews.com.

Potash and COVID-19: Producers

Nutrien (TSX:NTR,NASDAQ:NTR) — Sector leader Nutrien has a statement posted on its homepage outlining the measures it has implemented to help curb the spread of the coronavirus, while also providing a critical element to the food supply chain.

“While many of us will experience some frustration about not being able to find things on our grocery lists, this is a short-term problem,” reads the announcement.

It continues, “As an agriculture industry, we need to look ahead to future food production to ensure this isn’t a long-term issue. Nutrien is at the beginning of the food supply chain, and our role as an essential service, is more critical than ever.”

The world’s largest potash producer goes on to note that farmers need to be supported at this crucial time, especially as the spring planting season begins in Canada.

“Our immediate focus needs to be on getting farmers what they need from products to people. That means finding safe ways to support foreign temporary workers amid travel bans and border closures.”

Canada is the top country for potash production, with output topping 12 million metric tons annually. The North American country is also a leader in terms of agricultural exports, shipping more than C$56 billion in agrigoods annually.

The Canadian government has announced it will allow agricultural temporary foreign workers into the country as an exemption to the nation’s travel ban; however, closures at Mexican visa offices have left Canadian farmers concerned they will still be shorthanded.

BHP (ASX:BHP,NYSE:BHP,LSE:BLT) — International miner BHP owns the Jansen potash mine in Saskatchewan, and has been implementing new protocols directly related to the COVID-19 pandemic.

Plans to install liners in the service and production shafts at Jansen have been reduced to help keep the number of employees on site down.

The company has also introduced an accelerated payment program to support First Nations, Métis and local community businesses and communities in Saskatchewan.

Mosaic (NYSE:MOS) —  Major company Mosaic has three potash projects in Saskatchewan, as well as more than two dozen phosphate operations in the US and South America.

In a special investor update, the agricultural additive company noted that its employees are working from home, and said that it has restricted business travel and formed a response team to oversee its COVID-19 action plan.

Mosaic also gave a detailed overview of its current position and possible outcomes for the sector post-coronavirus. Its investment thesis highlights the potential value of buying now.

“(Mosaic) is currently trading at less than 50 percent of net tangible asset value, creating a significant long-term investment opportunity,” the report reads. “… People need to eat, and fertilizer is critical to ensure adequate food supply.”

Israel Chemicals (NYSE:ICL) — Israel Chemicals has potash and phosphate projects around the world.

In a March 25 update, the Tel Aviv-based company reported its compliance with government regulations, referencing its enhanced actions to safeguard employee health and safety.

In reaction to mounting concern about growing cases in Spain and in adherence to directives from the government, Israel Chemicals has halted activity at its Spanish mine as well as at a ramp-up project.

“As of (March 25), the extent of the capacity curtailment is immaterial to the company’s business,” reads the statement from the company.

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Manufacturing at the firm’s sites in China is ongoing. In its announcement, Israel Chemicals was soberly honest about the unknown implications this unprecedented event is having on the world.

“… the company is unable to accurately assess the impact of the COVID-19 virus pandemic on the company, due to, among other factors, the heightened volatility in the markets, the uncertainty regarding the duration of the pandemic, the extent of its impact on the markets in which the company operates, and additional countermeasures governments and central banks may take,” it reads.

The firm advised investors to review the risk factors section of its 2019 annual report for a detailed description of company mandates and various outcomes.

Potash and COVID-19: Developers

Highfield Resources (ASX:HFR) The company is also focused on Spain, where it is currently working to develop the Muga project.

In its 2019 annual report, released in late March, the company addressed the COVID-19 pandemic, citing increased efforts to protect staff.

“Fortunately, as a pre-operations company, we have far fewer risks than many others,” it reads. “We are required to operate within the constraints of broader measures being imposed in Spain and may suffer the ensuing impacts and consequences.”

On March 29, Spain issued a royal decree mandating that all employees of non-essential businesses remain at home between March 30 and April 9.

While the country’s mining sector has not been deemed essential, companies that participate, supply and maintain the manufacturing industry have been given that designation.

Sirius Minerals and Anglo American (LSE:AAL) Potash developer Sirius Minerals was acquired by mining major Anglo American in mid-March to develop the Woodsmith potash project.

While owned by Anglo, Sirius remains the developer of the project and both companies have issued statements regarding the status of the UK project, which requires several sunken shafts to be completed.

 

Investing During the Pandemic

   
The latest on what experts see coming for resources and commodities amidst the Coronavirus pandemic.
 

In a March 26 statement, Sirius noted that it was increasing hygiene measures, social distancing and temperature monitoring.

“Our construction sites must remain staffed to ensure that we are fulfilling our responsibility to make sure they are safe, and that essential complex plant and equipment is maintained,” the announcement explains. “We will continue to progress with some construction to support the continuity of the project, but ONLY when it is safe to do so.”

In a comprehensive overview of all its operations, released on March 27, Anglo American reported it is winding down operations at the site.

“In line with the British Government’s measures to prevent the spread of COVID-19, Anglo American is in the process of pausing most construction and development activity on its Woodsmith polyhalite project,” the Anglo release states. “Appropriate action is being taken to enable safe and swift resumption of work.”

Gensource Potash (TSXV:GSP) — Developing the Tugaske potash project in Saskatchewan, Gensource Potash has opted to have its employees to work remotely during the pandemic.

The company has also canceled travel plans and intends to have its general meeting on May 29 virtually.

“Gensource has been proactive in engaging with its debt and equity partners to evaluate potential impacts that may ensue due to COVID-19 and the associated financial market turmoil currently unfolding,” reads a company statement. “We are pleased to advise that all parties remain focused and engaged in all the work streams required to see the project through to financial close.”

More COVID-19 coverage from INN

Click the links below for more of INN’s commodity-specific coverage of COVID-19:

Don’t forget to follow us @INN_Resource for real-time updates!

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

Editorial Disclosure: Gensource Potash is a client of the Investing News Network. This article is not paid-for content.

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