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PotashCorp cuts jobs, mines amid nutrient downturn

PotashCorp revealed sharp production cutbacks, including mine closures, in a cost-cutting drive, prompted by "challenging market condition", which will cost one-in-six of its employees their jobs.

The Canada-based group, the largest potash producer by capacity, said that it was to axe 18% of its workforce, equivalent to more than 1,000 jobs.

"This was not an easy decision, but it is a necessary one," Bill Doyle, the PotashCorp chief executive, said.

The great majority of the posts will be lost at North American operations, with some job losses in Trinidad too.

'Sluggish environment'

The cuts have been prompted by a "sluggish environment" PotashCorp blamed on soft demand among emerging market customers

"A significant portion of fertilizer demand comes from developing markets, where growth has been less robust than expected," Bill Doyle, the PotashCorp chief executive, said.

The group is so cut 215,000 tonnes of phosphate capacity as of 2015 through moves including the closure of one of its two facilities in White Springs, Florida, the key US state for sourcing the nutrient.

The cutbacks will "improve our efficiency… and enhance our global position," boosting margins by some $10-15 a tonne, Mr Doyle said.

The group produced 2.06m tonnes of phosphates in the year to the end of September, and sold 3.58m tonnes.

Potash cutbacks

In potash, Mr Doyle said that the group "will be staffed to run at a reduced level for the foreseeable future".

Cost savings of $15-20 a tonne are expected in 2014, rising to $20-30 a tonne by 2016, from measures including the suspension of one of two mills in Lanigan, Saskatchewan, by the end of this year, and the closure of the Penobsquis mine in New Brunswick within the next four months.

This will leave the group with capacity, including inventories, to supply more than 10m tonnes of potash "which should provide ample supply cushion".

PotashCorp produced 7.62m tonnes of potash in the year to the end of September, and sold 7.65m tonnes.

Watershed moment

The cutbacks are among the most serious in the industry so far from a downturn most observers date to July, when Russia's Uralkali quit the Belarusian Potash Company cartel with Belaruskali, which controlled more than 40% of world trade in the nutrient.

Uralkali, one of the lowest cost potash producers, said instead that it would switch from a price disciplined approach to ramping up output, fuelling a drop in prices of potash and other nutrients, and raising question marks over the viability of fresh potash capacity in the pipeline.

Other potash groups which have announced cutbacks include Germany's K+S.

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