Potash at Scotiabank Conference

posted in: Notes | 0

Jochen Tilk – President and CEO, Potash Corporation

Merging with Agrium

“Agrium and Potash have embarked on a vision to be the new company to merge as a merger vehicle and we’ve been discussing this for a while. We started on ideas and concepts of operation synergies approximately a year ago, and as we talked about various products phosphate and then nitrogen evolved in the concept of what would be if we put these companies together. And what we present to you is really an exciting new company that would be the world’s largest crop nutrient company, and the third largest natural resource company in Canada.”

We have to create value

” It’s A, my firm belief and I’m very glad Chuck shares that. We take the future of our companies and our shareholders in a way that we have just some positive control over that. We have to create value. I mean sitting back and waiting and waiting the markets to change around you is not about creating value, its essentially just beings somewhat passive. I think Chuck and I said, can we create value by creating synergies, can we create strategic value, can we grow the company, and everything is a yes, yes, yes.”

Chuck Magro – President and CEO, Agrium

Market conditions have been tough

“So if you look at the market conditions today, and if you start with fertilizer, all there are below their historical average. And if you look at crop pricing there’s a similar trend, right. Corn, soybeans, you name your crop and most of them are at least at or below historical pricing levels. In crop chemistry, there’s been an increase in competition and you can see the consolidation happening in that pace and pricing are falling this year as well in crop chemistry. Just to given an example, glyphosate is down about 10% so far this year alone. And farmers are pulling back. So you can see the profitability of farmers, they are pulling back on, for example, some fungicide applications because it doesn’t spend well.”

Early harvest good for fertilizer

“The harvest is going to be early this year, which is helpful for fertilizer applications and we actually have some fertilizer going down in the south right now. We’ve had good moisture, which is very important, so we expect a very strong ammonia run this year. And speaking with our customers, we fully expect that the application rates for NP&K will be at normal rates for the fall season and certainly moving in to the spring.”

The new company will be third largest nitrogen producer in the world

“The new company, second largest nitrogen producer in North America, third largest in the world, and even at today’s market conditions, the new nitrogen business will generate a $100 a ton of cash. And then access to the best potash assets in the world. And again that’s a business that’s generating somewhere between $75 and $100 a ton of cash right now.”