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China paying $576/T for Sask. potash

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Published: April 17, 2008

Saskatchewan’s major potash firms will sell into China this year at a 227 per cent markup over their 2007 pricing.

Canpotex Ltd., the overseas marketing arm of PotashCorp, Mosaic and Agrium, on Wednesday announced a deal with Chinese fertilizer concern Sinofert Holdings, worth US$576 per tonne, up $400 over its 2007 price.

Canpotex has, however, prorated China’s 2008 volumes and, due to “unprecedented” demand and the timing of this deal, can only commit one million tonnes to Sinofert for the remainder of this year.

“This settlement highlights the importance of securing supply in an increasingly tight market,” said Bill Doyle, CEO of Saskatoon-based PotashCorp, in that company’s press release Wednesday.

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Referring to currently escalating prices for potash and “extraordinarily tight supply” Doyle said that “with the intense pressure on global food production and continued growth in potash demand, this is the reality for our industry for the foreseeable future.”

Canpotex ships primarily red standard grade potash to China, but also supplies some white standard grade and granular product.

Saskatchewan’s resources minister, Bill Boyd, said Thursday the deal is good news for the three companies’ shareholders, the industry’s 3,500 employees in the province and the economy overall.

Saskatchewan set a new record for potash sales in 2007 at $3 billion, up 12 per cent from the previous record year in 2005. Total sales of 17.4 million tonnes last year were also a record, up six per cent from the previous mark set in 2004, the provincial government said.

Interest in potash dispositions is also at “unprecedented” levels, with a record 5.5 million hectares in permits issued or applied for, the province noted. The industry has announced potential capacity expansions at its existing mines, totalling an additional 11.3 million tonnes of potassium chloride at a capital cost of $6.5 billion.

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