Acron warned it could take until early 2014 for the uproar in the potash market caused by the break-up of a major cartel to settle down, even as BHP Billiton offered the sector some cheer by standing by a huge Canadian project.
The Russia-based fertilizer group acknowledged the "volatile situation" in the potash market caused by the decision by Uralkali, of which it owns 3%, to quit the Belarusian Potash Company joint venture which controlled more than 40% of world trade in the nutrient.
The move by Uralkali - and its warning that potash prices, then about $400 a tonne, could drop below $300 a tonne - has thrown the market into disarray, as producers and buyers attempt to find new pricing levels, and assess the impact on demand and output, besides on returns prospects for new projects.
"Stabilisation" in the market "may happen within the next three to six months", Acron said, warning that the volatility was hurting the market for its core product of NPK, a popular fertilizer based on a mixture of nitrogen, phosphate and potash.
"Until stabilisation happens, the [NPK] market will remain uncertain and weak," the group said, although adding that its production costs looked set to fall "due to lower global prices for potash".
'Longer-term outlook strong'
Acron stopped short of commenting on the implications for its Russian potash mine project, Talitsky, of the lower prices, although Alexander Popov, the group's chief executive, did highlight that the group was "pursuing an ambitious investment programme aimed at vertical integration".
However, separately, BHP Billiton did ease concerns that its giant Jansen potash project in Canada might fall victim to the lower prices, revealing $2.6bn in investment on building shafts and surface infrastructure at the site by 2017.
"The longer-term outlook for potash is strong," the group said, flagging the need for farmers to meet growing demand for agricultural products, and confirming positive indications on the project signalled to Agrimoney.com three weeks ago.
"This will increase the need for potash and require the construction of new mines," BHP said.
It added that its projections for the market assumed a "shift away from the current marketing dynamic", under which the North American Canpotex potash marketing cartel still controls close to 30% of world trade, and has helped keep prices well above output costs.
"We believe the potash price will ultimately reflect the cost of adding new supply."
'Vote of confidence'
Andrew Mackenzie, the BHP chief executive, said: "Continued development of the shafts reflects our confidence in the quality of our 5.3bn-tonne measured resource and the compelling long-term fundamentals of the potash industry."
The group had offered a "vote of confidence in the project. We strongly believe that over decades to come this has the potential to deliver significant returns to our shareholders", he said.
Nonetheless, BHP's comments signalled a delay from the original start-up date of 2015, and the group also the potential sale of stakes in Jansen.
The future of the project "in time, may include the introduction of one or more partners".
Acron's comments came as the group unveiled a 20% drop to 5.2bn roubles ($169m) in earnings for the January-to-June half, on revenues down 11.4% at $8.82bn roubles ($284m).
Revenues were held back by a fall in fertilizer prices, with foreign exchange losses also contributing to the fall in profits.
"Fluctuations in the rouble-dollar exchange rate in the reporting period had a material impact on the group's financial performance," Mr Popov said.
Acron shares closed up 1.0% at 1010.0 roubles in Moscow.