Canada’s Potash Corp of Saskatchewan (PotashCorp), the world’s
largest fertiliser company, would cut 18% from its workforce in Canada,
the US and Trinidad, as it grappled with subdued demand, particularly
from critical developing markets, where growth had been less robust than
expected and low crop-nutrient prices.
About 1 045 people in all three of the company’s business operating segments – nitrogen, phosphate and potash – as well as corporate services, would be impacted by the reductions.
PotashCorp on Tuesday said that despite its long-term confidence in its business drivers, the sluggish market environment had been most visible in its potash and phosphate businesses.
“This is a difficult day for our employees and our company. While these are steps we must take to run a sustainable business and protect the long-term interests of all our stakeholders, these decisions are never easy. We understand the impact is not only on our people, but also in the communities where we work and live, and PotashCorp will work hard to help those affected through this challenging time,” president and CEO Bill Doyle said.
The changes were intended to optimise the company’s lowest-cost operations, while retaining the ability to respond to expected demand levels and the product needs of customers.
POTASH POUNDING
PotashCorp said it was reducing the permanent potash workforce by about 570 people. The majority of these positions would be at the Lanigan and Cory facilities, in Saskatchewan, as well as at the New Brunswick (NB) operation. The Patience Lake facility and Saskatoon corporate headquarters would also be affected.
Operating changes included suspending production at one of the two Lanigan mills by the end of the year, while keeping it in a care-and-maintenance mode; reducing production at the Cory facility by year end; and shuttering the Penobsquis facility, in NB, at the end of the first quarter 2014, which would allow the company to accelerate development activities at the Picadilly mine.
The Allan and Rocanville facilities, in Saskatchewan, were not expected to be impacted.
PotashCorp said it expected the operational capability for 2014, along with the inventory position, to provide it with the ability to supply more than ten-million tonnes, which should provide an “ample” supply cushion.
Despite being staffed to run at reduced levels for the foreseeable future, the Lanigan and Cory plans provided the flexibility to ramp-up operations as market conditions warrant.
Expansion spending at Rocanville – the lowest-cost operation – would continue. The project, which was about 90% complete, was expected to further enhance the firm’s competitive position and play a critical role in meeting future customer needs.
Further, PotashCorp said it would close the Suwannee River chemical plant in the second half of 2014 – one of two at the White Springs phosphate facility, in Florida. This was expected to impact about 350 people. The granulation plants at this facility will continue to operate.
A loss of capacity at White Springs was expected to be partially offset by higher operating rates at the Aurora phosphate facility, in North Carolina. The company would lose about 215 000 t/y of phosphorus pentoxide (P2O5) output within the phosphate business beginning in 2015, and product mix optimisation were expected to result in improved per-tonne gross margin contribution.
PotashCorp said the impact on customers was expected to be minimal due to product-mix flexibility, as well as its ability to direct volumes to offshore or domestic markets.
At Aurora, the number of permanent employees would be cut by about 85.
While PotashCorp expected to reduce the workforce at its US and Trinidad nitrogen facilities by about 20 permanent people, it did not expect any changes to the operational capability.
There would also be workforce reductions at the Northbrook, Illinois, office that included the company’s US sales and support services for the nitrogen and phosphate businesses.
The majority of changes across the company’s business segments were expected to be complete before year-end, despite certain positions at impacted operations were expected to remain in place through a transitional period.
PotashCorp said that where feasible, affected employees would be offered voluntary severance packages before any involuntary reductions were implemented. The company would also provide assistance to all employees in their transition to new opportunities.
PotashCorp said it expected the announced changes to result in lower per-tonne operating costs – most notably in the potash and phosphate segments – which would improve each nutrient’s competitive position globally.
Potash cost savings were estimated at $15/t to $20/t in 2014, with a further $20/t to $30/t targeted by 2016. In phosphate, the gross margin improvement was expected to total about $10/t to $15/t of P2O5.
One-time costs associated with these changes were estimated at $70-million for severance charges and PotashCorp said it was currently reviewing the carrying value of its affected assets and a write-down, if required, would be incorporated into the fourth-quarter results.
“While these are difficult decisions, we know that they help ensure our company remains positioned for the future and able to grow long-term value for those who depend on our sustainability and success,” Doyle said.
GLOBAL MARKET DOWN
PotashCorp in October said the unexpected July unravelling of the world's largest potash cartel, the Belarus Potash Company (BPC), had resulted in a “predictable”, extremely cautious market during the three months ended September 30, that had chipped away at its third-quarter profit.
The break-up of the BPC, a joint venture between Russia's Uralkali and Belarussian partner Belaruskali, left North America's Canpotex, comprising of PotashCorp, Agrium and Mosaic, as the dominant potash export venture.
However, this did not help to boost profits and PotashCorp, and it reported a 45% drop in third-quarter profit to $356-million, or $0.41 a share, down from $645-million, or $0.74 a share, mainly as a result of weaker prices for all three of its crop nutrients and lower potash sales volumes.
PotashCorp said that despite the need for proper crop nutrition fuelling strong demand for potash through the first half of 2013, the change in strategy by Uralkali in late July created considerable market uncertainty and stalled global demand.
Critical offshore markets – particularly large contract buyers in China and India – delayed potash purchases or were reluctant to accept significant tonnage against existing contracts. Despite Brazil continuing to be a region of relative strength, with buyers procuring tonnes in preparation for their upcoming planting season, offshore shipments from North American producers fell to one of the lowest third-quarter totals in recent history.
The company's potash sales fell to 1.5-million tonnes in the third quarter, down from 2.1-million tonnes a year earlier, while its average realised price dropped 28% to $307/t.
About 1 045 people in all three of the company’s business operating segments – nitrogen, phosphate and potash – as well as corporate services, would be impacted by the reductions.
PotashCorp on Tuesday said that despite its long-term confidence in its business drivers, the sluggish market environment had been most visible in its potash and phosphate businesses.
“This is a difficult day for our employees and our company. While these are steps we must take to run a sustainable business and protect the long-term interests of all our stakeholders, these decisions are never easy. We understand the impact is not only on our people, but also in the communities where we work and live, and PotashCorp will work hard to help those affected through this challenging time,” president and CEO Bill Doyle said.
The changes were intended to optimise the company’s lowest-cost operations, while retaining the ability to respond to expected demand levels and the product needs of customers.
POTASH POUNDING
PotashCorp said it was reducing the permanent potash workforce by about 570 people. The majority of these positions would be at the Lanigan and Cory facilities, in Saskatchewan, as well as at the New Brunswick (NB) operation. The Patience Lake facility and Saskatoon corporate headquarters would also be affected.
Operating changes included suspending production at one of the two Lanigan mills by the end of the year, while keeping it in a care-and-maintenance mode; reducing production at the Cory facility by year end; and shuttering the Penobsquis facility, in NB, at the end of the first quarter 2014, which would allow the company to accelerate development activities at the Picadilly mine.
The Allan and Rocanville facilities, in Saskatchewan, were not expected to be impacted.
PotashCorp said it expected the operational capability for 2014, along with the inventory position, to provide it with the ability to supply more than ten-million tonnes, which should provide an “ample” supply cushion.
Despite being staffed to run at reduced levels for the foreseeable future, the Lanigan and Cory plans provided the flexibility to ramp-up operations as market conditions warrant.
Expansion spending at Rocanville – the lowest-cost operation – would continue. The project, which was about 90% complete, was expected to further enhance the firm’s competitive position and play a critical role in meeting future customer needs.
Further, PotashCorp said it would close the Suwannee River chemical plant in the second half of 2014 – one of two at the White Springs phosphate facility, in Florida. This was expected to impact about 350 people. The granulation plants at this facility will continue to operate.
A loss of capacity at White Springs was expected to be partially offset by higher operating rates at the Aurora phosphate facility, in North Carolina. The company would lose about 215 000 t/y of phosphorus pentoxide (P2O5) output within the phosphate business beginning in 2015, and product mix optimisation were expected to result in improved per-tonne gross margin contribution.
PotashCorp said the impact on customers was expected to be minimal due to product-mix flexibility, as well as its ability to direct volumes to offshore or domestic markets.
At Aurora, the number of permanent employees would be cut by about 85.
While PotashCorp expected to reduce the workforce at its US and Trinidad nitrogen facilities by about 20 permanent people, it did not expect any changes to the operational capability.
There would also be workforce reductions at the Northbrook, Illinois, office that included the company’s US sales and support services for the nitrogen and phosphate businesses.
The majority of changes across the company’s business segments were expected to be complete before year-end, despite certain positions at impacted operations were expected to remain in place through a transitional period.
PotashCorp said that where feasible, affected employees would be offered voluntary severance packages before any involuntary reductions were implemented. The company would also provide assistance to all employees in their transition to new opportunities.
PotashCorp said it expected the announced changes to result in lower per-tonne operating costs – most notably in the potash and phosphate segments – which would improve each nutrient’s competitive position globally.
Potash cost savings were estimated at $15/t to $20/t in 2014, with a further $20/t to $30/t targeted by 2016. In phosphate, the gross margin improvement was expected to total about $10/t to $15/t of P2O5.
One-time costs associated with these changes were estimated at $70-million for severance charges and PotashCorp said it was currently reviewing the carrying value of its affected assets and a write-down, if required, would be incorporated into the fourth-quarter results.
“While these are difficult decisions, we know that they help ensure our company remains positioned for the future and able to grow long-term value for those who depend on our sustainability and success,” Doyle said.
GLOBAL MARKET DOWN
PotashCorp in October said the unexpected July unravelling of the world's largest potash cartel, the Belarus Potash Company (BPC), had resulted in a “predictable”, extremely cautious market during the three months ended September 30, that had chipped away at its third-quarter profit.
The break-up of the BPC, a joint venture between Russia's Uralkali and Belarussian partner Belaruskali, left North America's Canpotex, comprising of PotashCorp, Agrium and Mosaic, as the dominant potash export venture.
However, this did not help to boost profits and PotashCorp, and it reported a 45% drop in third-quarter profit to $356-million, or $0.41 a share, down from $645-million, or $0.74 a share, mainly as a result of weaker prices for all three of its crop nutrients and lower potash sales volumes.
PotashCorp said that despite the need for proper crop nutrition fuelling strong demand for potash through the first half of 2013, the change in strategy by Uralkali in late July created considerable market uncertainty and stalled global demand.
Critical offshore markets – particularly large contract buyers in China and India – delayed potash purchases or were reluctant to accept significant tonnage against existing contracts. Despite Brazil continuing to be a region of relative strength, with buyers procuring tonnes in preparation for their upcoming planting season, offshore shipments from North American producers fell to one of the lowest third-quarter totals in recent history.
The company's potash sales fell to 1.5-million tonnes in the third quarter, down from 2.1-million tonnes a year earlier, while its average realised price dropped 28% to $307/t.
