With demand for fertilizer products expanding in many global markets and potash prices rising, Canada's Potash Corp. of Saskatchewan has unveiled plans to expand its capacity by 2.7 million metric tons/year by 2012.

The $1.6 billion expansion project would bring its total capacity to 18 million metric tons. But with potash trading at $1,000/metric ton on the spot market, that cost seems a good bet. "It is clear that global potash demand is continuing to grow more quickly than increases in supply," said PotashCorp CEO Bill Doyle.

Reuters reports that as of June, prices for potash exported from Canada had already climbed about 200% from a year earlier, according to data from Potash Corp. Brian MacArthur, a UBS analyst recently said he expects fertilizer prices will be substantially stronger than originally expected and raised his 2008 potash price forecast to $648/ton, from $611. More impressively, the 2009 forecast moves to $1,100/ton from $850, a 29% increase.

See also: Potash supply at risk, more price hikes expected