The head of Nutrien Ltd. says the company has enough room for potash expansion in Saskatchewan that it doesn’t make sense to invest in expanding production in costlier regions.
Chief executive Chuck Magro made the remarks on conference call with financial analysts Tuesday after taking a writedown due to the permanent closure of its potash mine in New Brunswick.
“The decision is pretty obvious when you look at, we have five million tonnes in Saskatchewan of excess capacity today, and if we invest a little bit of capital in the six facilities in Saskatchewan we could even go much higher than our operational capacity that’s stated of 18 million tonnes for very economic expansion.”
The economics of the East Coast mine just couldn’t compete with the Prairie operations, Magro said.
“The cash cost of production in New Brunswick is just so much higher than Saskatchewan.”
On Monday, Nutrien, which keeps its books in U.S. dollars, reported a net loss of US$1.04 billion in its latest quarter after the company took a $1.8-billion impairment charge on the shuttered mine.
The loss amounted to $1.70 per share for the quarter ended Sept. 30 compared with a profit of $53 million or six cents per share a year ago.
Adjusted net earnings came to 47 cents per share, above analyst expectations for 40 cents per share according to Thomson Reuters Eikon.
In its outlook, Nutrien raised its full-year net earnings guidance for 2018 to between $2.60 and $2.80, from the previous guidance of $2.40 and $2.70 per share.
The company also raised its quarterly dividend to 43 cents, up from 40 cents.
Nutrien put the Picadilly mine on care and maintenance in early 2016 amid a weak market for the fertilizer. The decision to permanently close the mine means about 430 jobs won’t be coming back to the location near Sussex, N.B.
At the time of the closure, Nutrien was known as the Potash Corp. of Saskatchewan. It became Nutrien at the start of the year after completing a merger with Agrium Inc. that added more production options for the company.