Shares of Canadian potash producers fell sharply Tuesday after a word that Russian company will pull out of a large cartel and will likely drop the price of the commodity used for fertilizer.
OAO Uralkali said it was withdrawing from a joint venture with another company from Belarus that sets the price for about a third of the world’s potash supply. It has a railway into China and plans to sell more potash there.
The world’s largest reserves of potash are located in Canada’s western province of Saskatchewan. That province has ridden a wave of prosperity based on royalties from potash extraction.
Uralkali has a much lower cost of production than does its Canadian rival, PotashCorp. Potash prices are expected to decline dramatically. The Saskatchewan government says it is too soon to know the impact of this development but it will watch developments closely. No doubt.
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