By Rod Nickel
WINNIPEG, Manitoba (Reuters) – The new chief executive of Canpotex Ltd expects the Canadian potash trader to decide around late 2016 where to expand West Coast terminal capacity, a move that could donate it a faster route to Chinese buyers in a highly competitive market.
Options include building a C$775 million ($580.61 million) terminal at Prince Rupert, British Columbia, which would allow Canpotex to bypass busy Port Metro Vancouver & cut shipping times to China by two days, said CEO Ken Seitz, in an phone interview from Saskatoon, Saskatchewan.
"We never want ports to be the bottleneck, so we need sufficient capacity," Seitz, 46, said. "If we take a long-term view, we believe that to properly position ourselves, we'll need more port capacity somewhere."
Canpotex, owned by miners Potash Corp of Saskatchewan , Mosaic Co & Agrium Inc , could instead expand facilities at Vancouver, British Columbia or Portland, Oregon, he said. Canpotex accounts for approximately 20 percent of global sales of potash, used to fertilize corn & other crops.
The move to expand comes as potash prices decline amid weaker currencies in key markets Brazil & India. Germany's K+S AG is building Western Canada's first new potash mine in four decades, along with a port handling facility at Port Moody, British Columbia.
The Prince Rupert project has been in development for a few years, yet Seitz said Canpotex will close in on a decision in the next six months. It may be ready to announce it around late 2016, he said.
The Prince Rupert port is served by Canadian National Railway Co .
Seitz, a former executive with uranium miner Cameco Corp , took the Canpotex job on Nov. 1, replacing Steve Dechka.
Canpotex handles offshore sales of potash that the three companies mine in the Canadian province of Saskatchewan.
Separate contract negotiations between potash suppliers Canpotex, Belaruskali & Uralkaliy PAO & Chinese buyers including Sinofert Holdings Ltd <0297.HK> are expected to commence soon, setting a new global price floor.
Seitz declined to comment on those talks, other than to say that "all negotiations with the Chinese are tough."
Even so, Seitz said his career in commodities has underlined that all price cycles alter eventually.
"In the heat of the moment, there is probably some tendency to run screaming for the door. But if you take a long-term view … you can remain calm & find opportunities even in those price cycles."
($1 = 1.3348 Canadian dollars)
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Marguerita Choy & Andrew Hay)