Short-term volatility | Company president is confident industry will rebound from shake-ups that have affected profits
Long-term potash sector optimism was mixed with warnings of continued short-term instability as the multibillion-dollar industry celebrated a half century last week in Ottawa.
It was a week when PotashCorp, the industry’s largest player, reported a sharply weaker sales and income outlook for the year as sales and prices continued to be affected by the summer breakup of an alliance between Russian and Belarusian potash exporters.
“The most recent quarter can best be characterized as a predictable response to an unpredicted event,” PotashCorp president Bill Doyle said in a public statement that downgraded latest quarter profits to $356 million from last year’s $645 million.
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Potash prices fell 23 percent during the third quarter to an average $307 per tonne, said the company.
Uncertainty causes markets to act cautiously.
“This was the case during the third quarter, particularly in offshore potash markets, where significant purchases were delayed as Russian producer pronouncements left buyers waiting in anticipation of weaker prices,” said Doyle.
“While this volatility does not change the long-term underlying fundamentals of fertilizer demand, it did significantly slow market activity and our ability to deliver the results we expected.”
Boyle told reporters during the launch of an exhibition on the growth of the potash industry over the past 50 years that the current industry and market turmoil will have no lasting effects.
“In history, it will be seen as a blip,” he said.
“As an industry, we are susceptible to short-term events.”
In fact, the industry problems were nowhere in sight as industry leaders, federal and Saskatchewan politicians gathered at the Canadian Museum of Science and Technology in Ottawa to launch the Potash: Feeding the World exhibit.
They called potash “the perfect product” and the key to feeding a future world of five billion people.
Lynne Yelich, federal minister of state for foreign affairs and the self-styled “queen of potash” because of the four mines in her Saskatoon and area riding, said the exhibit sponsored by the government and industry was an important reminder to Canadians of the industry that few outside of Sask-atchewan understand.
“It’s important that we explain the miracle of this nutrient,” she said.
Doyle predicted the Saskatchewan industry will grow but only through investment by existing companies. New entrants are unlikely, he said.
However, Alberta MP Leon Benoit said there are discussions about developing potash deposits in his province.
