WINNIPEG (Reuters) — Canadian potash producer Nutrien is not looking to sell assets to raise capital, chief executive officer Ken Seitz said, as falling fertilizer prices have caused it to scrap projects and trim costs.
Nutrien said Aug. 2 that it would halt plans to expand potash production in Saskatchewan and end work on a clean ammonia project in Louisiana.
“We’re not in a situation where we feel we need to focus on selling assets and will only do something like that opportunistically,” Seitz said Aug. 3.
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Potash prices have fallen as offshore markets worked through inventories in spring and due to a delay in settling annual supply contracts for Chinese buyers, which typically set a global price floor.
Nutrien also faces logistics problems. A strike last month of dock workers at Port of Vancouver and mechanical problems at a terminal in Portland, Oregon, have backed up potash exports by Canpotex, a company owned by Nutrien and Mosaic.
Seitz said the companies are not considering steps to reduce their reliance on Vancouver and Portland, noting that they can already move some potash through Saint John, N.B., Churchill, Man., and Morehead City, North Carolina.
“We’re in a bit of a unique situation here with Portland and Neptune being down at the same time. I don’t think that’s ever happened before,” he said. Neptune is the terminal that Canpotex ships from in Vancouver.
Nutrien officials told analysts on a conference call that it may take weeks to clear the Vancouver potash backlog, and it sees its Portland terminal back in service by the end of 2023.
Nutrien missed market estimates for quarterly profit on Aug. 2, as falling prices dented its margins.
On an adjusted basis, the company reported earnings of $2.53 per share for the three months ended June 30, compared with the average analyst estimate of $2.79 per share, according to Refinitiv data.
The company has also decided to indefinitely pause its ramp-up plans for potash production and halt work on its clean ammonia project at Geismar, Louisiana.
The company cited market conditions for stopping efforts to bolster potash output to 18 million tonnes.
Potash prices have eased now that shipments from major supplier Belarus have resumed, whose exports were largely frozen last year because of western sanctions following Russia’s invasion of Ukraine.
The suspension of work at its 1.2 million tonne clean ammonia plant was because of elevated costs and uncertainty on the timing of emerging uses for clean ammonia, it said.
Fertilizer companies have been building ammonia plants along the U.S. Gulf of Mexico to take advantage of Inflation Reduction Act subsidies and the existing export infrastructure.
Nutrien also lowered its 2023 adjusted earnings forecast to the range of $3.85 to $5.60 from a prior view of $5.50 per share and $7.50 per share.
It had said in July that it would cut production at its Cory Potash mine near Saskatoon and expected its full-year profit to take a hit from lower exports because of a strike by Canadian dock workers.
It said it expects to cut capital expenditure by about $200 million in 2023.
