German mineral miner K+S will cut production of potash fertilizers, dragging core earnings lower, as a halt imposed by China on potash imports dampens global markets.
“In the current weak market environment, which is further intensified by the continuing Chinese import bans on the standard potassium chloride product, adjusting production is a difficult decision, but the right one,” K+S executive Alexa Hergenroether said in a statement Monday.
K+S mines and produces potash at facilities in Germany and in Saskatchewan, where it opened a mine at Bethune, about 60 km northeast of Moose Jaw, in 2017.
The grou said its potash output will be reduced by up to 300,000 tonnes by the end of the year, holding back core earnings, or earnings before interest, taxes, depreciation and amortization (EBITDA), by as much as 80 million euros (C$116.6 million), the company said.
It had previously forecast 2019 EBITDA of 730 million to 830 million euros, targeting the sale of 6.9 million to 7.1 million tonnes of potash for the year.
“Irrespective of this, we are continuing to work hard on implementing the ongoing measures to increase product quality at the Bethune plant in Canada and to strengthen operational excellence at the German sites,” Hergenrother said.
Larger Canadian rival Nutrien earlier this month flagged a US$100 million-$150 million reduction in potash EBITDA as a result of cutting output by about 700,000 tonnes.
Russian potash producer Uralkali last week followed up with plans to reduce output by 350,000-500,000 tonnes.
U.S. competitor Mosaic Co. also announced last month it would temporarily idle one of its Saskatchewan potash mines, which it said would allow it to avoid US$40 million-$50 million in cash expenditures in 2019.