Agrium said it expected to receive approval next year to expand its potash production by potentially 40%, when demand for the nutrient should be well into a rebound.

The fertilizer group said it had already signed a contract with SNC Lavalin and PCL Industrial Management for the $800m development of the Vanscoy mine, in Canada's Saskatchewan province.

The programme will be completed in 2014, expanding the annual capacity of the mine, which currently produces about 1.79m tonnes of potash a year, by 750,000 tonnes.

Potash rebound 

Agrium chief executive Mike Wilson said the development, which is contingent on approval expected late in 2010, represented "an important part" of the group's strategy of expanding in all three divisions – wholesale, which includes mining, retail and the advanced technologies unit which markets controlled-release products.

Mr Wilson added that the Vanscoy investment "in no way" diminished Agrium's determination to acquire CF Industries, for which Agrium has offered $4.5bn for the rival US fertilizer company

CF's board has rejected repeated overtures from Agrium, terming the latest offer "far from compelling".

'Underground city' 

The Vanscoy mine, situated near Saskatoon, has sufficient ore to last a century, tapped from a seam which stretches 300km east-west and 150km north-south.

Agrium describes the mine, which is located 1km underground, as "like a small underground city, with personnel travelling the roadways in a fleet" of off-road vehicles.

Agrium shares cosed down 3.4% at Can$64.50 in Toronto on a week day for stocks.