Reuters — Agrium said Thursday it will keep its only potash mine shut for longer than expected after a breakdown last week, and the downtime will cause it to lose $40 million on wholesale potash operations in the second half of this year.
The Calgary-based fertilizer and ag retail company halted production at its Vanscoy, Sask. mine last Thursday due to a mechanical failure on its main hoist system.
The outage prompted the company to bring forward a planned turnaround to tie in its capacity expansion project, and Agrium said production would remain suspended until the tie-in was completed.
The mine will remain shut three to four weeks longer than the 14 weeks planned to tie in its capacity expansion, CEO Chuck Magro said on a conference call.
Agrium expects to lose a gross $40 million on potash in the second half of the year due to fixed costs and limited production, he said.
Potash accounts for a smaller part of Agrium’s business than nitrogen sales and farm retail operations, making up seven per cent of overall gross profit in 2013.
Late Wednesday, Agrium reported a smaller-than-expected drop in second-quarter profit. Excluding one-time items, it earned $4.37 per share, above analysts’ estimates of $4.11 a share.
Sales rose six per cent to $7.34 billion, above analysts’ expectations of $7.18 billion.
The company reported gains from the inclusion of sales from ag retail centres previously owned by Regina grain firm Viterra.
Agrium completed the acquisition of Viterra’s retail assets in Canada in October and acquired 13 locations in Australia in June.
Already the biggest U.S. retail seller of fertilizer, chemicals and seed, Agrium reported a 15 per cent increase in retail sales to farmers to $6.4 billion in the second quarter.
— Rod Nickel is a Reuters correspondent based in Winnipeg.