Winnipeg | Reuters — The new chief executive of Canpotex expects the Canadian potash trader to decide around late 2016 where to expand West Coast terminal capacity, a move that could give it a faster route to Chinese buyers in a highly competitive market.
Options include building a $775 million terminal at Prince Rupert, B.C., which would allow Canpotex to bypass busy Port Metro Vancouver and cut shipping times to China by two days, said CEO Ken Seitz, in an phone interview from Saskatoon.
“We never want ports to be the bottleneck, so we need sufficient capacity,” Seitz said. “If we take a long-term view, we believe that to properly position ourselves, we’ll need more port capacity somewhere.”
Canpotex, owned by miners PotashCorp, Mosaic Co. and Agrium, could instead expand facilities at Vancouver or at Portland, Ore., he said. Canpotex accounts for about 20 per cent of global sales of potash, used to fertilize corn and other crops.
The move to expand comes as potash prices decline amid weaker currencies in key markets Brazil and India. Germany’s K+S AG is building Western Canada’s first new potash mine in four decades, along with a port handling facility at Port Moody, B.C.
The Prince Rupert project has been in development for a few years, but Seitz said Canpotex will close in on a decision in the next six months. It may be ready to announce it around late 2016, he said.
The Prince Rupert port is served by Canadian National Railway (CN)_.
Seitz, a former executive with uranium miner Cameco, took the Canpotex job on Nov. 1, replacing Steve Dechka.
Canpotex handles offshore sales of potash that the three companies mine in the Canadian province of Saskatchewan.
Separate contract negotiations between potash suppliers Canpotex, Belaruskali and Uralkaliy PAO and Chinese buyers including Sinofert are expected to begin soon, setting a new global price floor.
Seitz declined to comment on those talks, other than to say that “all negotiations with the Chinese are tough.”
Even so, Seitz said his career in commodities has underlined that all price cycles change eventually.
“In the heat of the moment, there is probably some tendency to run screaming for the door. But if you take a long-term view… you can remain calm and find opportunities even in those price cycles.”
— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.