EDITOR: | May 6th, 2013

The Pulse: Ripples in potash sector; Turkey will need uranium; Japan’s offshore wind push

| May 06, 2013 | No Comments
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Pulse_FinalPotash is the news with two developments  — a new controversy over Saskatchewan potash policy and India slicing its subsidies (again). Clearly, it may not be all plain sailing for the potash producers in the near future with London brokers Whitman Howard predicting subdued Indian demand and prices possibly going lower than the $400/tonne recently negotiated with Indian and Chinese customers.

As of April 1, the Indian government cut its potash and phosphate subsidies. The hardest hit is muriate of potash, the dominant form imported by India; those subsidies have been reduced by 21.5% to 11,300 rupees a tonne ($209.69) and of diammonium phosphate by 14% to Rs12,350 a tonne ($229.17).

You have to say, however, that given the prices of both commodities, these are quite generous subsidies even at their reduced levels. And the cuts have been forced on the government in New Delhi by the parlous fiscal problems. Last year the government spent Rs305.76 billion ($7.35 billion) on fertilizer subsidies.

Meanwhile, a controversy has erupted in the pages of the Regina Leader-Post.

It was sparked by an article written by John W. Warnock, formerly of the University of Regina and author of Exploring Saskatchewan’s Potash: Who Benefits?

He raised the prospect that another potash glut was on the way. Three existing potash companies were together adding 14 million tonnes a year of extra capacity while another five million tonnes would come from new mines developed by K+S Potash and Western Potash. Then there’s BHP Billiton’s Jansen Lake mine project in the wings, Warnock arguing that BHP is unlikely to put the development on hold having already spent $2 billion there.

In Russia Uralkali is expanding capacity by 6 million tonnes a year.

His conclusion: “In a few years, the government of Saskatchewan will again have to face the problem of over-investment in the potash industry”.

This drew a response from Bill Johnson, a public affairs director at Potash Corp of Saskatchewan.

He wrote in the Leader-Post that Warnock’s theories were built on the comparisons to the state of the province’s potash industry more than four decades earlier (Warnock having referred to the glut of 1969).

“Since that time, the world’s population has nearly doubled, the economies of countries like China and India have increased exponentially and the long-term need for potash to improve global food production has outgrown the previous capacity of the industry,” he replied. Companies such as Potash Corp were working to invest in the potash industry to make it possible to meet global demand for decades to come, wrote Johnson.

URANIUM AND NUCLEAR ENERGY: It now looks as if Japan will get the nod to help build Turkey’s second nuclear plant. Mitsubishi is set to partner with France’s GDF Suez, with the four reactors being supplied by France’s Areva in the 4,500MW facility. This project will be sited at Sinop on the Black Sea coast. It will follow what is expected to be a Russian-financed plant at Akkuyu with generating capacity of 4,800MW.

Turkey, however, has only limited known uranium resources. The largest project at Temrezli has a contained 7,400 tonnes of uranium. This project is controlled by an Australian listed company, Anatolia Energy (ASX:AEK). Anatolia last week moved to take 100% ownership of the project.

GREEN ENERGY: Japan’s government is to make power utilities pay a higher price to wind power generated by offshore turbines in a move to encourage more such installations being built out to sea. The Ministry of Economy, Trade and Industry (METI) says the electricity companies now pay a tariff of 23.1 yen (23c) per kilowatt-hour for all wind-generated feed-in supply, regardless of whether the wind farm in onshore or offshore.

The Nikkei news service says the plan to raise the feed-in tariff for offshore plants is due to the fact that such turbines involve a higher capital cost that ones built on land. METI wants more built at sea to harness the strong ocean winds for power generation.

The report cites plans by a Marubeni-lead consortium to build a 240MW mega wind farm off the coast of Ibaraki prefecture.


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