Belaruskali Drills for New Potash Even as Oversupply Cuts Prices

Belaruskali will seek new potash resources to increase the state-owned company’s output capacity even as international prices for the fertilizer are declining.

“This year we plan to begin passing the western fault line at the Krasnoslobodski mine, which will allow us to approach richer deposits of potash ore,” Chief Executive Officer Ivan Golovaty said in a company newsletter dated Aug. 28.

Reaching new layers of potash should allow the Belarusian producer to raise potential output by 1 million metric tons a year if needed, from 12.6 million tons now, Golovaty said.

While world potash demand is seen falling 6 to 8 percent this year, Belaruskali is one of the main sources of foreign currency revenue for the cash-strapped domestic economy. With the Belarusian ruble down 37 percent against the dollar this year according to data compiled by Bloomberg, potash exports brought in about $1.4 billion during the first half, according to the national statistical committee.

Prices in the key Brazilian market, where Belarus competes with Russia’s Uralkali PJSC, fell to $310 a ton this week, from $380 in December. Uralkali sees global demand falling to 58 million tons from a record 63 million tons in 2014.

Belaruskali has already begun uncovering new potash layers at its second production unit and studying the potential for another layer at its third unit, according to Golovaty. Work on a new plant at the Petrikov deposit is also continuing, with mining set to begin in the second half of 2016, he said.