Is Prince Rupert’s future in Potash?

While we’ve been down the road before when it comes to potential industrial development, there’s a story making the national business circles that Prince Rupert is being considered for the development of a potash terminal.

Canpotex International Pte. Ltd. is expected sometime within the next month, to outline its plans to its board of directors offering up three possibilities, all designed to construct the world’s largest potash terminal facility. The project would make for a development that will add some 10 million tonnes of potash handling capacity per year to the West coast shipping industry.

The three locations on the short list are apparently a terminal currently operated by the company in Vancouver, which would be expanded for their needs, a new terminal to be constructed in Cherry Point, Washington or an option in the Northwest that would take advantage of Prince Rupert’s day closer sailing time to Asia.

The cost of the project would be between 300 and 500 million dollars and would be designed to take advantage of the booming Asian markets which are creating a bit of a boom time in the potash and fertilizer industries.

The Vancouver Sun outlined the details behind the project on line and in Wednesday’s paper..

While we wait for the news as to which location will get the project, we’re sure that the local real estate industry will be anxious to see if Prince Rupert gets to the finish line of the Potash derby..

Canadian potash firms plot expansion
Growth could include a doubling of shipping capacity on the West Coast
Sean Silcoff
Canwest News Service
Wednesday, May 21, 2008

VIENNA, Austria -- With fertilizer prices soaring worldwide, Canada's potash giants are considering a massive $300-million to $500-million US expansion that would almost double shipping capacity at key West Coast ports to booming markets in Asia.

Next month, management of Canpotex International Pte. Ltd. will recommend a plan to its board to build a new facility or expand an existing one, adding 10 million tonnes of potash handling capacity per year, company chief executive Steven Dechka said at an international fertilizer conference.

Canpotex is owned by and jointly markets potash in Asia, Latin America and Oceania for the three firms that mine Saskatchewan's rich potash deposits: Potash Corp. of Saskatchewan Inc., Calgary-based Agrium Inc. and Minnesota's Mosaic Co.

"We feel the fundamentals of our business have changed," Dechka said. "We made investments in the 1990s [when prices and demand were much lower], and we feel we now have to be ready for the next 20 to 50 years."

Up for consideration are three options: a new 10-million-tonne facility in Prince Rupert, B.C.; enlarging an existing Canpotex terminal in Vancouver, which is already being expanded to increase its annual capacity by 30 per cent to 8.5 million tonnes; or building a new facility in Cherry Point, Wash., near Vancouver. In any of these scenarios, the new facility or expanded facility would be the world's largest potash terminal, Dechka said.

Jim Prokopanko, Mosaic's CEO, added that each option "has its positives and negatives."
The Prince Rupert facility is served by just one rail line, but is a day closer to Asia market. The Vancouver port is congested, but Canpotex's facility can be easily expanded. The empty Washington site would have to be built from scratch, and shipments would have to cross a border, but the land is easily accessible by large vessels.

The project would almost double Canpotex's annual capacity of 12 million tonnes, which takes into account the Vancouver expansion that is due for completion in 2010.

"It's an important investment and expansion that will allow the Canadian producers to expand" and serve offshore markets, said Prokopanko, a director of Canpotex.

Starting in the late 1990s, Canpotex built and expanded a port facility in Portland, Ore., and recently ordered 2,000 custom rail cars, increasing its fleet by 57 per cent.

Demand for all fertilizers, after rising steadily earlier this decade, took off in late 2006, in tandem with sharply higher grain prices. Rising demand for grains has been driven by the rapid income growth in India, China and other emerging nations. As they get wealthier, tens of millions of people annually are adding more meat to their diets. More meat means more grain to feed the livestock, and higher grain prices have encouraged farmers to invest more in increasing yields by using fertilizer.

Meanwhile, producers of potash -- the underlying mineral potassium is one of three key nutrients, along with nitrogen and phosphate -- are seeing years of disciplined management pay off.

The world is so short of available potash, companies that mine it in Saskatchewan and their peers in potash-rich Russia and Belarus have not only jacked up prices more than twofold this year, but are also rationing among their top buyers. The Saskatchewan mining firms have decided it is now time to bring long-dormant mines back into production. Potash and Mosaic each plan to spend billions of dollars to increase mining capacity by 50 per cent over the next five and 10 years, respectively, to 15 million tonnes of potash a year. Agrium is investing $500 million to expand its 2.1-million-tonne mining capacity by almost 40 per cent.

Ken Nyiri, a fertilizer consultant with U.K.-based British Sulphur Consultants, said that while prices for all fertilizers should stay high, potash prices should remain strong the longest -- declining to their next trough level in 2013-14 -- due to the fact there are deposits in just 12 countries and new mines cost at least $2.5 billion and take five years to build.