Potash Corp. of Saskatchewan is planning a $1.8 billion US expansion of its potash operation in Rocanville, in the southeast of the province.
The company said Wednesday that the expansion will be cheaper and quicker than opening a new mine.
Potash Corp. three-month trading
The two-million-tonne mine and mill expansion will raise the company's total capacity to 15.7 million tonnes by the end of 2012, three years quicker than previous forecasts.
"With a global environment of growing demand and tight supply, potash consumers around the world need us to bring more product to the table, and this is our next step in meeting that need," president and CEO Bill Doyle said in a release.
Demand for potash to be used in fertilizer is increasing with the rising world population and growing wealth.
Potash Corp. stock gained $5.03 to finish at $113.15 on the TSX.
The Rocanville operation is one of the lowest-cost facilities in the potash industry, produces a high quality product, has unique geology that allows the company to use the most advanced and economical mining methods, and is close to the U.S. market, Potash Corp. said.
Adding to the existing operation will save at least $700 million US, compared with a greenfield plant.
Rocanville is the fourth expansion the company has announced this year. The others are:
- The "debottlenecking" and expansion at Patience Lake, Sask., returning 360,000 tonnes of idled capacity by 2009.
- Debottlenecking and expansion in Cory, Sask., to add 1.2 million tonnes by 2010.
- A greenfield plant near Sussex, N.B., to add a two-million-tonne mine expected to open late in 2011.
But with the industry operating near capacity, the Rocanville expansion will be needed to meet further demand growth.
"We believe the factors driving long-term growth in potash demand are unlikely to reverse," Doyle said.
The expansion includes:
- A new shaft so that there will be one to carry people and materials and two for production, used to take ore to the surface.
- A new underground system to transport ore from the new mining area to the production shafts.
- A second mill, beside the existing one.
The project will start as soon as permits are received.
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