News, North America, Phosphate, Purified Acids, South America

Potash Market Update: The Mosaic Company’s 3Q19 Results Show Mixed Picture

The Mosaic Company’s 3Q19 financial results reflect the expected strong performance of potash and Mosaic Fertilizantes, the Brazil-based unit of the company, but were negatively impacted by lower than expected phosphates segment gross margins, according to the Fortune 500 company’s press release. The Florida-headquartered company has also announced a series of actions aimed to temporarily decrease production in both potash and phosphates sectors to match demand in 2019, whereby it expects those efforts will position the company to capitalize on opportunities in 2020.
For 3Q19, Mosaic reported a net loss of US$44 million, and adjusted net earnings, after notable items, of US$29 million. The company accelerated development of the Esterhazy K3 potash mine in Saskatchewan, Canada, by an additional year, which will allow the closure of the K1 and K2 shafts, the elimination of brine management costs by mid-202 and the lowering of the cost of production. The company expects to exceed its previously announced synergy target for Mosaic Fertilizantes of US$275 million in 2019, by up to US$50 million. In addition, the company announced a new target of US$200 million in incremental annual EBITDA growth through ongoing business transformation efforts beginning in 2020 and ending by 2022.
During 3Q19, the company repurchased 5.8 million shares for US$125 million, bringing the total number of shares to 7.1 million shares of its common stock for US$150 million year-to-date. Its Brazil-based unit completed tailings dam remediation activities and returned the Tapira and Araxá phosphate mines in the South American country to full production in September, a month ahead of the original schedule announced in March. All necessary activities to comply with the new tailings dam requirements in Brazil are now complete and the company received new required safety certifications as of September 2019 to continue full operations.
The Saskatchewan-based Colonsay potash mine was temporarily idled in August while the Esterhazy will also be temporarily idled in 4Q19, bringing the company’s total 2019 potash curtailment to 600 000 t. The curtailment is not expected to impact the pace of development at the Esterhazy K3 mine project. Mosaic also announced last month that it would lower phosphates production by approximately 500 000 t in 2019 by temporarily idling its operations in Louisiana. These actions are designed to speed up the reduction of fertilizer inventories remaining after a weak spring application season in the US. All three facilities are available to resume production when demand improves.

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