Potash Corp. set to buy Saskterra

Saskatoon-based Potash Corp. of Saskatchewan (TSE) is set to acquire all the shares of Saskterra Fertilizers from Husky Oil for $47 million. The acquisition, which has been given preliminary approval by federal regulators, will boost Potash’s interest in the Allan potash mine to 100% from 60%. The mine is in Saskatchewan.

Saskterra’s main asset is its 40% stake in the mine, of which Potash already owns the remaining interest. By acquiring an additional 628,000 tonnes of annual capacity owned by Saskterra, Potash will boost its annual production capacity to 9.2 million tonnes.

“This is an important acquisition for PCS,” said President C.E. Childers. “We now have complete ownership of all four mines we operate, giving us more operating flexibility than we previously enjoyed.” The deal is expected to close in mid-July, the company said.

Prior to the deal, Saskterra was the only Saskatchewan potash producer which did not market its output through Canpotex, an offshore sales association for six Saskatchewan potash companies.

The acquisition by Potash will bring all of the province’s potash output targeted for the offshore market under the direction of Canpotex. The marketing company has consented to a special increased allocation of 500,000 tonnes per year to Potash for the next five years.

Although potash prices received by Potash during the second quarter of this year were called “disappointing,” by management, steps are being taken to control inventories and negotiate higher second- half prices with customers in both the export and domestic markets, the company said.

During 1989, Canpotex was reported to have sold 3.7 million tonnes of Saskatchewan potash offshore. It is estimated that offshore markets used a total of 41 million tonnes of potash — mostly to make fertilizer — last year, while North American buyers used about nine million tonnes.