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Nutrien Ltd. NTR-T is planning a major ramp up in potash production, as the war in Ukraine exerts relentless pressure on global supplies of the key fertilizer.

The world’s biggest fertilizer producer, based in Saskatoon, said on Thursday that it intends to boost its annual potash production to 18 million tonnes by 2025 – about 21.5 per cent higher than current levels. This year, Nutrien expects to produce about 14.8 million tonnes, a figure that had already been revised upward.

Before the war in Ukraine, Russia and Belarus accounted for roughly 40 per cent of global potash output. But exports fell about 20 per cent in the first quarter compared with the previous year owing to sanctions imposed by the West on the two countries.

Meanwhile, the shorter-term production increases by Nutrien have not filled the void in world demand.

“Nutrien is really the only major player with idle capacity on the planet,” Steve Hansen, analyst with Raymond James, said in an interview. “That three million tonnes [increase] is sorely needed.”

To meet the higher production volumes over the next three years, Nutrien intends to make further investments in mine development and underground equipment, and plans to hire about 350 people.

Citing “escalated concerns for global food security,” the company’s interim chief executive officer, Ken Seitz, said in a release that he sees the potential for “multi-year strength” in agriculture and crop input fundamentals.

Nutrien is already having a banner year, earning a record US$1.4-billion in the first quarter and doubling its profit forecast for 2022, as it benefited from surging fertilizer prices after Russia invaded Ukraine in February.

However, several analysts raised questions during an investor call with the company’s management team on Thursday about the prospect of the potash market quickly returning to equilibrium, if the war ends promptly.

Mr. Seitz said that while “those risks do exist,” a return to preconflict trade patterns is unlikely, even over the medium-term. That’s because he anticipates continuing impediments around shipping potash out of Russia, such as difficulties for exporters in obtaining financing and insurance, and procuring vessels. He also sees possible extended constraints around Belarusian production. The financial opportunity of boosting production of potash far outweighs the potential costs of not proceeding, he said.

Nutrien was formed in 2018 after Agrium Inc. merged with PotashCorp of Saskatchewan. Nutrien has recently come through a tumultuous period that saw it terminate two CEOs in the span of about eight months.

Mayo Schmidt was let go in January after personality clashes with subordinates, poor performance in marketing meetings with investors and tension with the board, The Globe and Mail reported. His predecessor, Chuck Magro, was cut loose in April, 2021, after a strategic fallout with the board over a possible joint-venture deal with Australian mining giant BHP Group Ltd. on the multibillion-dollar Jansen potash project in Saskatchewan, The Globe also reported.

BHP later announced it intends to build Jansen on its own. The project won’t help alleviate current potash capacity constraints in the market, as it isn’t scheduled to come online for about another five years. Mr. Hansen, however, isn’t ruling out that Nutrien could still team up eventually with BHP on Jansen, despite the talks fizzling last year. For BHP, a partner would help it split the costs of construction and risks around execution.

Shares in Nutrien rose by 2.4 per cent in trading on the Toronto Stock Exchange on Thursday, closing at $113.31. Helping boost the share price was also the announcement of a $2-billion increase to its share buyback program for the year. Buying back shares in the open market not only increases demand for the stock, but it boosts the company’s per-share profit because it reduces the number of shares outstanding.

Even with Thursday’s move higher, Nutrien’s stock has fallen by more than a fifth since hitting a record of $148 a share in April. That’s in large part because North America nitrogen prices fell sharply after an inventory buildup after a late planting season in major markets such as North Dakota, Minnesota and Western Canada.

Still, with Russia being the world’s biggest exporter of nitrogen, Nutrien is anticipating possible supply shortfalls in the fertilizer input in the future. Last month, it announced it was evaluating the construction of a new $2-billion plant at its existing Geismar nitrogen facility in Louisiana.

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