Mosaic is preparing to outline the damage of a ban on the expansion of a phosphate mine which threatens to lead to the closure of the whole site, and make a big dent in the company's profits potential.

The fertilizer giant will late on Monday brief investors on an injunction issued by a Florida court, that saw a "substantial likelihood of success" for environmentalists fighting the extension of the South Fort Meade mine.

Mosaic has already said it will seek an accelerated appeal into the injunction, which prevents the group mining land for which it had gained permission from the US Army Crops of Engineers.

"We do not believe the decision was supported by the overwhelming facts supporting the Army Corps' decision to issue the… permit," Richard Mack, Mosaic's general counsel, said, adding the company was "disappointed" by the ruling.

"This permit has received a higher level of scrutiny and contains more environmental protections than any prior Florida phosphate mining permit."

Jobs threat

However, US District Judge Henry Lee Adams said that Mosaic had failed adequately to consider alternatives to mining on wetlands, as American environmental legislation requires.

Noting the extent of public concerns over the extension, which would affect more than 500 acres of wetlands, he ordered the Army Corps to conduct a public hearing.

Mosaic has warned that the inability to expand the mine threatens the site's viability, with South Fort Meade possessing insufficient phosphate rock to maintain operations at current levels, and has already put a question mark over 221 jobs.

The mine is responsible for one-third of the group's phosphate capacity.

The environmentalists, including the Sierra Club, battling Mosaic claim there is sufficient land apart from the wetlands for the company to expand into.

Share impact 

Analysts have warned that a negative ruling could hurt Mosaic's profits, with National Bank two weeks ago rating a potential injunction as a "key risk" for the fertilizer group's shares.

"If the South Meade mine shuts down permanently, our price target declines from $67 to $60, assuming that management does not undertake offsetting actions, for example, increasing rock production at existing mines, importing rock from a third party," the broker said.

Closure would mean the loss of more than 5m tonnes of phosphate rock production a year, equivalent to 2.5m-3m tonnes of finished phosphate fertilizer.

Nonetheless, helped by the rally in fertilizer stocks being fostered by strong grain markets, Mosaic shares closed 3.7% higher at $49.39 in New York.