Potash strike may affect sales
A report out of Winnipeg regarding the strike affecting three Saskatchewan potash mines suggests shipments to industrial customers may be affected, although a spokesperson for the company said it is still to early to be certain.
August 20, 2008 By Reuters/Saskatoon Star Phoenix
August 20, 2008
Winnipeg, MB -A strike at three Saskatchewan potash mines owned by Potash Corp. of Saskatchewan could affect shipments to industrial customers, which account for about five per cent of the company's sales, a PotashCorp spokesperson said Tuesday.
But it is too early to tell how the strike by about 500 mine workers, members of the United Steelworkers union, will affect the mainstay fertilizer business of PotashCorp, the world's largest fertilizer company, spokesperson Bill Johnson said in an interview.
"It's a little early in the strike to really assess what impact this will have on our commitments to customers," he said, declining to comment on whether there had been any impact on contractual commitments since workers walked off the job on Aug. 7.
The three mines — Cory, Allan and Patience Lake — account for 30 per cent of PotashCorp's production and about six per cent of world capacity.
Potash producers have been unable to keep up with demand for the fertilizer as record crop prices give farmers the means and motivation to apply more potash to soil to boost yields — even though prices for the mineral have soared.
A year ago, potash sold for less than $200 per tonne, basis Vancouver. But the market surged to $700 per tonne by the end of July, according to data on PotashCorp's website, making potash worth more than $1,000 per tonne in international markets, including freight.
The strike comes during the off season for fertilizer, and has had no impact thus far on potash prices, Barrie Bain, director of fertilizer consultancy Fertecon Ltd, said in an e-mail.
But that could change if the strike lasts beyond mid-September, when demand starts to pick up, Bain said.
"If the strike continues into October, we could then start to see a significant impact on prices," he said.
Potash is also used for industrial applications such as glass making, oil drilling, aluminum recovery, water softening and to make potassium hydroxide used in soaps and batteries.
"We've got a small number of industrial customers and there's certainly a potential for their shipments to be impacted," Johnson said.
There have been no formal contract talks between the company and union since the strike began and there were no talks scheduled as of Tuesday, he said. The major issue in dispute is wages.
PotashCorp has said the union asked for a bonus based on commodity prices that would cost $157,000 per employee this year, but the Steelworkers have said that figure is overstated.