Loss by potash firm cuts into Rio earnings

A substantial loss incurred by Potash Corp. of America was the principal reason for a decrease in consolidated net earnings for Rio Algom in the first six months.

The company reports earnings in the period of $38.2 million, or 86 cents a share, compared to $48.2 million, or $1.10 a share, for the similar period last year.

In second-quarter 1987, Rio Algom had consolidated net earnings of $22 million, or 50 cents a share, compared to $24 million or 55 cents a share, in 1986. Consolidated revenue for the latest three months was $395.1 million, against $333.7 million in the 1986 period.

Major factors responsible for the loss by Potash Co., (its Saskatoon mine ceased operations last February because of greatly increased water inflow) were interest charges (capitalized in 1986 until the Sussex, N.B., mine achieved commercial production as of Nov 1, 1986), shutdown expenses at Saskatoon, and weak potash prices.

Rio Algom says uranium earnings were lower this year, mostly because of a previously-announced reduction in deliveries of uranium to Ontario Hydro, and a slight decline in average revenue price partly due to the weaker U.S. dollar.

Negotiations are going ahead to finalize an agreement under which Rio Algom and Bartile Corp., a publicly-listed Australian company, will combine the two companies’ Australian metal manufacturing and distribution businesses into a new company. Combined annual sales are currently in the $150-million(A) to $160-million range.