Did Shakeup in International Potash Market Put Hammond Project on Hold?

13 Oct

by Ken Davidson

Potash Project on Hold?

The sign at the construction entrance for the Potash project on Hump Road in Hammond.

Search financial news for potash prices and the headlines are bleak. “Potash Volumes 30% Lower than Expected this Quarter says Agrium” reads one recent headline. Stock prices have reflected the lax demand. The NWI Gazette took a look at the overall potash market in an attempt to see if that is causing some of the delay in breaking ground on the proposed Hammond plant. Here is what we found.

Potash is a commodity that is mined in only a few places in the world but is used as a fertilizer throughout the world. The relevant markets for potash are the US, China and India. The potash market has always been a closely held market, in the words of the CFO of Potash Corp, an oligopoly. Few producers and a large market led to few price fluctuations. That all changed earlier this year when the Chinese bought into Russian potash producer Urakali. Suddenly prices for potash dropped from $470 metric ton to $400 metric ton. The market reeled. Share prices slumped.  Prices for potash continue to drop and may reach lows of $300 per metric ton according to analysts.

Potash Corp. of Saskatchewan, the company investing in the Hammond facility, suffered a decline in market value of over one third of its total. In one day in late July, shares dropped from $38 to $28. The price in June was $44.

All of this would generally be good news for Northwest Indiana. Dropping fertilizer prices may lead to lower food prices in the long term. In this case, however, the City of Hammond has invested significant resources in luring Potash Corp. to the city. It is unclear how much, if any, of the promised $10M in incentives have been provided to Potash Corp but it is clear that construction at the site has barely begun. Work completed so far is a small amount of site preparation.  “Lefty” called Mayor McDermott’s radio show on Friday and asked him about the project. The Mayor responded that he did not know the current status of the project. Could it be on hold because of the market volatility or are there other issues? What is the status of the loan that the City of Hammond is providing to Potash Corp.?

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5 Responses to “Did Shakeup in International Potash Market Put Hammond Project on Hold?”

  1. Kara Gullickson Graper via Facebook October 13, 2013 at 2:41 am #

    I thought of Potash when the fertilizer plant in Texas blew up earlier in the year, killing those firemen. 😦 I wonder if that had something to do with the prices going down?

  2. Gary Free-Press via Facebook October 13, 2013 at 1:55 pm #

    Does this mean that the 5 permanent jobs that were promised won’t be coming to Hammond after all?

  3. Brett Ellis via Facebook October 20, 2013 at 3:23 am #

    Potash has nothing to do wiht the explosion in Texas.

  4. Brett Ellis via Facebook October 20, 2013 at 3:23 am #

    Potash has nothing to do wiht the explosion in Texas.

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