(Bloomberg) — Mosaic Co. has temporarily curtailed potash production at its mine in Saskatchewan after weaker demand sent fertilizer prices sliding across North America.
The Colonsay site had been operating at 1.3 million tonnes per year, with plans to expand to as much as 2 million tonnes per year by the end of next year, the company said in a statement. It was restarted in August 2021 after being idled for two years due to weak demand.
Fertilizer prices have slumped after spiking to record levels after Russia’s invasion of Ukraine. Farmers from Brazil to Canada have eased back on buying, in some case choosing to skip a year of potash application or to use less fertilizer in the face of high prices. That’s left a glut on the market, with some cargoes being redirected to the US from Brazil.
“With demand returning slower than expected in the second half of 2022, Mosaic’s inventory levels are sufficient to meet near-term demand,” the statement showed. Underground development work will continue in anticipation of the restart of both mills in early 2023, the company said.
Still, Mosaic and fellow fertilizer producer Nutrien Ltd. see a strong market ahead. Last week, Nutrien Chief Executive Officer Ken Seitz warned of looming shortages in coming years, with supplies from Russia and Belarus constrained. Nutrien plans to ramp up its capacity 40% by 2025.
“Our decision to temporarily curtail Colonsay reflects near-term dynamics and not long-term agricultural market fundamentals. Crop prices remain strong and continue to support healthy grower economics,” Mosaic’s President and CEO Joc O’Rourke said in the statement. “After a year of reduced applications, we believe farmers are incentivized to maximize yields, which should drive significant recovery in fertilizer demand in 2023.”
—With assistance from Elizabeth Elkin.