File photo of the Mosaic K2 potash mine near Esterhazy, Sask.TROY FLEECE/The Canadian Press
Potash Corp. of Saskatchewan Inc. , the world's top fertilizer maker, said it settled a lawsuit with Mosaic Co. over rights to the Esterhazy potash mine in Saskatchewan, ending a long-standing legal battle between the two potash producers.
Just a month away from a scheduled trial, Minnesota-based Mosaic agreed to deliver the output it owed to Potash Corp. – the world's largest producer of its namesake crop nutrient – for this year and the next, from the mine.
Mosaic's obligation to supply about 1.1 million metric tonnes of potash per year, under the tolling agreement, will expire on Dec. 31, 2012.
"The reversion of these potash tonnes, including an adjustment of our Canpotex entitlement ... will increase our annual potash production capacity to over 16 million tonnes by 2021," Mosaic chief executive officer Jim Prokopanko said.
Canpotex, jointly owned by fertilizer producers Potash Corp., Mosaic and Agrium Inc., is the international marketing arm of Canadian potash producers.
On Dec. 31, 2012, Potash Corp. will reallocate the production capacity at the mine to Mosaic.
Mosaic had said in May that it satisfied its obligation to Potash Corp. after selling the crop nutrient to the fertilizer giant for 40 years, at cost, under a tolling agreement.
Saskatchewan-based Potash Corp. dismissed Mosaic's claims at the time, and a trial was scheduled to begin in January.
"This settlement provides Potash Corp. and its stakeholders with certainty through 2012 and dovetails with our ongoing potash expansion program," Potash Corp. CEO Bill Doyle said in a statement.
Mosaic's counterclaim for damages arising from Potash Corp.'s declaration of force majeure in April 2009 will also be dismissed as part of the settlement.