Saskatchewan fertilizer giant PotashCorp says it’s owed more potash from a U.S. rival’s mine in the province, despite Mosaic’s claim to the contrary.
Minneapolis-based Mosaic Co. said Monday it has “satisfied its obligation” under a 40-year-old tolling agreement to supply potash from its Esterhazy, Sask. mine to PotashCorp, and will stop shipments to the Saskatoon company effective July 1.
Mosaic, formed in 2004 from the fertilizer businesses of Cargill and IMC Global, said Monday that over the past 40 years it and its heritage companies have supplied potash at cost from Esterhazy on demand from PotashCorp.
During that time, Mosaic said, PotashCorp “has requested and received substantially more potash” than has been mined from the reserves allocated to PotashCorp within the Esterhazy mine.
PotashCorp’s requests, which Mosaic said have recently been as much as a million tonnes per year, have thus been met from Mosaic’s own reserves, the U.S. firm said.
“Based on Mosaic’s calculations, the amount of potash mined for (PotashCorp) from Mosaic’s reserves is now equal to the amount expected to be mined from the remaining (PotashCorp) reserves,” Mosaic said Monday.
Thus, Mosaic said it believes that it has “no further obligation” to deliver anything other than PotashCorp’s remaining inventory.
Mosaic acknowledged that’s one of several points now “in litigation” before the provincial Court of Queen’s Bench concerning the two companies’ rights and obligations at Esterhazy.
“All necessary steps”
PotashCorp said in a statement Tuesday it “disputes (Mosaic’s) interpretation and intends to take all necessary steps to enforce its rights under the agreement,” pending the outcome of the legal dispute.
In the meantime, Mosaic said Monday, it has offered to “continue to ship additional product” to PotashCorp at market-based prices during the next 60 days.
Mosaic also said it has offered “other alternatives” to keep Esterhazy potash flowing to PotashCorp until the end of the trial, now booked to begin in January 2012.
The amount of PotashCorp-allocated reserves still at the Esterhazy site — currently the world’s largest potash mine — was calculated based on Mosaic’s 50 years’ experience there, and developed using the “most scientifically advanced” technologies, such as 3-D seismic imaging, the U.S. firm said.
Mosaic, the world’s No. 2 potash miner by capacity, announced in January that its biggest single shareholder, Cargill, plans to sell its 64 per cent share of the fertilizer firm, a stake worth an estimated US$24 billion.