Strike could tighten potash supply, push prices up even further

Nearly 500 workers walk off the job at three potash mines in Canada

By Dave Hannon -- Purchasing, 8/8/2008 2:37:00 PM

About 500 United Steelworkers Union members walked off the job at three potash mines in Canada Thursday night after talks between the union and Potash Corp. of Saskatchewan broke down. Two of the mines are closed for planned maintenance with one due to open again Monday. 

According to a Potash Corp. statement, the 487 union workers have been without a contract since April 30.

Barrie Bain, director of consulting firm Fertecon, told Reuters that combined the three mines represent 18% of Canadian capacity and 6% of world capacity. Potash Corp. will continue its planned expansion during the strike.

Last month, Purchaisng.com reported that in Russia, a vital rail line at one of the world’s largest potash mines was at risk of closing down due to a rapidly expanding sinkhole, and put the mine down for at least several weeks until a new rail line is completed

The continuing strong demand and tightening supply of potash has pushed spot prices up. According to Potash Corp.’s recent earnings statement, “As demand continued to exceed available supply in the quarter, PotashCorp and Canpotex, the offshore marketing company for Saskatchewan potash producers, shipped volumes to customers in North America and offshore, respectively, on an allocation basis.” The company said North American potash prices were up 122% quarter over quarter fueled by five price increases.