Potash Projects

Three major producers of potash (potassium chloride) have announced capacity expansions after the Saskatchewan government provided tax relief for new potash investment.

Agrium announced that it plans to proceed with a $65 million project that will add 310,000 metric tons per year of capacity at its Vanscoy, Saskatchewan, mine, bringing the company's total annual capacity to 2.1 million metric tons. Construction is scheduled to begin in July 2005, with completion slated for third-quarter 2006.

Mosaic will begin work immediately on a more than 360,000-metric-ton-per-year expansion at its Esterhazy potash facility with an investment of about $28 million. Completion is scheduled for fall 2006. And Potash Corp. of Saskatchewan will bring back 1.9 million metric tons of idled potash capacity at facilities in Lanigan and Allan at a cost of $275 million.

The announcements came immediately after the Saskatchewan government announced on April 11 a 10-year tax holiday from base payments on potash mine expansions of more than 200,000 metric tons of potassium chloride per year. The government also provided a capital investment incentive to promote production expansion.

All three firms say they are evaluating additional expansions in the province, home to most of North America's potash mines. Agrium says it is evaluating another expansion of similar size. Mosaic is looking at additional expansions of about 1.5 million metric tons that are in the engineering stage. And PotashCorp is exploring two smaller projects at its Cory and Patience Lake mines.

According to Natural Resources Canada, Saskatchewan produced about 14.2 million metric tons of potash in 2003 on a KCl basis. Saskatchewan accounted for 95% of total Canadian potash output that year.