July 14 (Bloomberg) -- Mosaic Co. and the province of Saskatchewan agreed to sell their nitrogen-fertilizer venture to Norway's Yara International ASA for about C$1.6 billion ($1.59 billion) as Mosaic focuses on other crop nutrients.

Proceeds from the sale of Saskferco Products ULC will be used to expand potash mines in Saskatchewan and projects outside the U.S., Plymouth, Minnesota-based Mosaic said today in a statement. The deal is expected to close in the third quarter.

Potash, a form of potassium, reached a record this year as farmers increased fertilizer use amid rising food prices. Rising demand and the dominance of the existing mining companies may push prices as high as $900 a metric ton this year, Fertilizer Economic Market Analysis and Consultancy said on May 13.

Mosaic considers potash ``a stronger business to be in,'' said Hugh Dive, who helps manage $5 billion at Investors Mutual Ltd. in Sydney. ``Phosphate-based, potash-based fertilizers are more scarce commodities'' than ammonia-based products, he said.

Canada and Russia have the largest reserves of potash according to U.S. Geological Survey data. Oslo-based Yara is the world's largest fertilizer maker.

Saskferco is one of North America's largest producers of nitrogen-based fertilizer. Its ``timely sale'' will allow Mosaic to focus on its core potash and phosphate business, Chief Executive Officer Jim Prokopanko said in the statement.

Mosaic owns half of Saskferco. Investment Saskatchewan, a corporation owned by the Canadian province, owns 49 percent and Canadian Imperial Bank of Commerce owns 1 percent.

Mosaic is the world's biggest phosphate producer and gets more than 75 percent of its revenue from potash and phosphate, based on Bloomberg data.

To contact the reporters on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net; Jack Kaskey in New York at jkaskey@bloomberg.net

Last Updated: July 15, 2008 00:41 EDT