SASKATOON — Nutrien Ltd. is raising its potash production this year in response to the uncertainty of supply from eastern Europe as Russia's invasion of Ukraine continues.
The Saskatchewan-based company is increasing production of the key fertilizer ingredient by nearly one million tonnes to reach about 15 million tonnes by the end of 2022. That's on top of almost one million tonnes added in 2021 in response to market demand.
In a news release, Nutrien interim president and CEO Ken Seitz said the impacts of Russia's attack on Ukraine extend beyond eastern Europe, as a disruption in the supply of key agriculture, fertilizer and energy commodities could have implications for global food security.
"Nutrien is responding to this period of unprecedented market uncertainty by safely expanding potash production to help provide our customers with the crop inputs they need," he said.
"We continue to closely monitor market conditions and will evolve our long-term plans to ensure we utilize our assets in a safe and sustainable manner that benefits all our stakeholders."
Most of additional volume is expected to be produced in the second half of the year.
The company anticipates a small increase in its capital spending and said it will be hiring additional workers at its potash mines in Saskatchewan.
Nutrien said its 2022 potash production will be nearly 20 per cent higher than in 2020.
Canada is the world's largest potash producer, but Russia and Belarus are also major exporters.
Andrew Wong, an analyst at RBC Dominion Securities Inc., said in a note that the gradual approach to adding supply will be well-received.
"Adding too much supply too quickly could raise concerns on longer-term oversupply," he said. "We also believe this prudent move reflects interim CEO Ken Seitz's significant experience and understanding of potash market dynamics, and should be encouraging for investors that management continues to execute well despite the turnover over the past year."
BMO analyst Joel Jackson said in a note that this move was inevitable. He added that there could be a supply gap this year even with a resolution to the war in Ukraine.
"The next move would be to invest and hire a material number of new miners to be able to target utilizing the last few millions of tonnes, but we think that would be some months away," he said.
At the onset of the war in Ukraine, Nutrien saw its stock price soar amid worries that the conflict would worsen the already tight fertilizer market.
Nutrien was created in 2018 following the merger between PotashCorp of Saskatchewan and Calgary-based Agrium Inc. The company produces about 27 million tonnes of potash, nitrogen and phosphate products worldwide.
This report by The Canadian Press was first published March 17, 2022.
Companies in this story: (TSX:NTR)
The Canadian Press
