Privately held fertilizer producer EuroChem Group plans to produce 1.1-million tonnes of potash in 2018 from its two new Russian mines and increase output steadily over six years, but it will be “rational” amid concerns about a supply glut, the company’s chief financial officer said on Wednesday.
Output capacity will ramp up to 8.3-million tonnes annually by 2024 or 2025.
The two mines, Usolskiy and VolgaKaliy, are closely watched by the potash industry, which has been dogged by low prices. Despite abundant potash capacity, new mines owned by EuroChem, Germany’s K+S and others are moving toward completion.
But EuroChem CFO Andrey Ilyin said the company’s mines are “not going to create a massive problem” of oversupply.
“We think that our product is not going to be a big disruption for the market in the near term,” Ilyin told Reuters on the sidelines of BMO’s Farm to Market conference in New York. “As anybody who is long potash, we are very mindful of what effect we might have on the global supply-demand balance.”
The company will also make its production decisions taking into account its rivals’ actions, he said.
“All of these things in combination will basically determine our behavior, which I’m sure will be very rational in the economic sense.”
Switzerland-based Eurochem, owned by Russian tycoon Andrei Melnichenko, also intends to convert up to 200,000 tonnes of potash to sulfate of potash (SOP), a premium product, in 2019, and to 500,000 tonnes of SOP in 2020 or 2021.Report Typo/Error