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[posting]34058988[/posting]UPDATE 2-Agrium to speed up search for new potash mine -CEO Wed May 7, 2008 3:07pm EDT (Adds CEO comments on acquisitions, natural gas. In U.S. dollars unless noted) By Jeffrey Jones CALGARY, Alberta, May 7 (Reuters) - Agrium Inc (AGU.TO: Quote, Profile, Research) is plowing more money into its search for a new potash mine site amid record prices for the crop nutrient, the chief executive of the fertilizer producer and farm-products retailer said on Wednesday. Agrium is examining a new development in Saskatchewan as it proceeds with with expansion of its current potash mine in the province, CEO Mike Wilson said. "Our board just today approved additional capital to accelerate our look-forward on greenfield facilities," Wilson told shareholders at the company's annual meeting. Potash prices have soared as farmers around the world try to capitalize on skyrocketing grain prices, which have caused food inflation in some countries and shortages in others. Agrium, the smallest of three producers in Canada's potash belt, mines 2.05 million tonnes of the mineral from a Saskatchewan operation and has said it is considering expanding capacity there by a total of 800,000 tonnes. That will likely cost $500 million, with one stage starting up in 2012 and a second a year later, he said. A new mine producing 2 million tonnes could cost $2.5 billion, Wilson told reporters. Earlier this year, Wilson said the company planned seismic tests on a greenfield potash mine site in the second half. Agrium shares were up 35 Canadian cents at C$87.10 on the Toronto Stock Exchange on Wednesday. Calgary-based Agrium, the world's third-largest nitrogen producer, has also bought several farm-retailing competitors to become the largest U.S. retailer of fertilizer, seed and chemicals. This week, it closed its $2.7 billion takeover of Colorado-based UAP Holding Corp. Wilson said the retail business provides stability amid cyclical swings in its commodity fertilizer sales. With fertilizer and crop prices surging, the company is generating stacks of cash above a $1.7 billion kitty on its balance sheet earmarked for funding the UAP deal. But Agrium will likely wait before jumping back into the acquisition market for retail assets, he said. "From a big acquisition point of view, unless something fell in our laps, I think we need a year to digest (UAP)," he said. "We obviously look at small things all the time, and on the other front, we're always entertaining opportunities." Agrium does not see world demand slowing down for fertilizer, but Wilson said producers will eventually boost supplies to ease the shortage. "In theory, the cycle should last anywhere from four to six years and beyond. In practice, usually you wake up and there's a surprise," he said. "But we keep looking over our shoulder and we don't see that. We think it's going to be an extensive cycle." Meanwhile, Agrium's nitrogen operations are thriving, despite the recent run-up in natural gas, its raw feedstock, above $11 per million British thermal units. Nitrogen prices have surged nearly $200 a tonne in the last three weeks, which, Wilson said, would be the equivalent of an $8 per mmBtu jump in gas price if that were the sole reason. "So actually, margins are spreading," he said. Agrium has hedged about 35 percent of its gas needs for the third quarter and 15 percent for the last quarter of 2008. ($1=$1.01 Canadian) (Additional reporting by Roberta Rampton; editing by Rob Wilson) © Thomson Reuters 2008 All rights reservedhttp://www.reuters.com/article/marketsNews/idUSN072279872008… |
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| Autor (Datum des Eintrages): | redbulll (08.05.08 20:35:52) |
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