Globe says MagIndustries seen as legitimate supplier

2009-09-02 08:52 ET - In the News

The Globe and Mail reports in its Wednesday edition that analysts have been suggesting that potash demand would return in 2010, because farmers can skip a year and still get strong yields from their fields. The Globe's Steve Ladurantaye quotes Jacob Bout, a CIBC World Markets analyst, as saying, however, that with a bumper crop this year, they may be inclined to go another season without the nutrient. Upgrading an existing potash mine requires prices to remain above $500 per tonne, while a new project requires prices up to $1,750 to justify construction (all figures U.S.). Experts said a new mine that produces about two million tonnes of potash would take about seven years to develop and would cost more than $2.5-billion. While eight projects are considered to have advanced beyond the conceptual stage, only Brazil's Vale SA mine in Argentina and Canada's MagIndustries' Republic of Congo mines are expected to proceed in the next year. MagIndustries' mine is expected to cost $1.2-billion and yield 1.2 million tonnes of potash a year, provided the company can secure financing. A Chinese company is studying MagIndustries' plans, and has indicated it would be willing to invest $280-million.