Intrepid Potash revealed it was starting to bring mothballed potash capacity back online as dealers return "actively" to the market to feed reviving farm consumption.

The US fertilizer group, whose potash production sank 40% to 504,000 tonnes last year, said it was "beginning to ramp up mines and plants to operate at more normal production rates".

The move followed a 62% rise to 150,000 short tonnes in potash sales in the last three month of 2009, with the group forecasting further rises in volumes this year.

"In the latter part of the fourth quarter 2009 and early 2010, we have seen dealers begin to actively step back into the market to purchase product", the Denver-based company said.

'More normal levels' 

Many fertilizer groups mothballed capacity last year in response to tumbling consumption, in particular in North America, as farmers scrimped on potash applications in response prices at a time of weak crop markets.

However, farmers were "recognising the need to purchase product for the spring season", Intrepid said.

"The 2009 crop in the US was robust, and given that potash application rates were down in 2008 and 2009, agronomics suggest that recent under-application of potash should lead to more normal application levels to maintain yields."

However, the company added that it might take until mid-2010 to bring its Carlsbad West mine, in New Mexico, back to "historic" production levels, "depending on our ability to expeditiously hire a sufficient number of qualified employees".

Its neighbouring Carlsbad East mine had returned to 24-hour activity, after production slumped some 90% to 2,000 tonnes in December thanks to below-zero temperatures and record snowfalls which disrupted electricity and water supplies.

Sliding prices 

The comments came as the group reported a 70% slide to $6.71m in earnings for the October-to-December period.

Thanks to lower potash prices, revenues fell by 8.1% to $73.1m despite the rise in volumes of the nutrient sold.

On a per-share basis, earnings came in at $0.09 a share, compared with the $0.11 a share that analysts were expecting, excluding one-off charges.

Intrepid shares closed up 3.6% at $28.51 in New York.