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Mosaic closes potash mine shafts at Esterhazy

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World Fertilizer,

The Mosaic Company is immediately closing the K1 and K2 potash mine shafts at Esterhazy in Canada. The company said closing K1 and K2 are key pieces of the transition to K3 but the timeline for the closure has been accelerated by nine months due to a recent acceleration of brine inflows.

The company is planning to resume production at the Colonsay potash mine and recalling workers as soon as practical. This restart will offset a portion of the production lost by the early closure of the K1 and K2 shafts at Esterhazy, and position the company to take advantage of the expected strong potash markets in 2022 and beyond. By March of 2022, the company's annualised potash production could increase by 2 million t from 2020 levels, as Esterhazy K3 ramps up to full capacity and Colonsay returns to service.

As a result of these operational changes, the company expects to eliminate brine management expenses after July 2021 and materially increase 2022 available potash capacity to take advantage of the expected potash market strength. During the expected transition period of July 2021 to March 2022, the company anticipates its potash production to be reduced by approximately 1 million t. By mid-2022, available annualised operational MOP capacity is expected to be 10.5 million t.

"Mosaic has been managing inflows at Esterhazy since 1985, and has accelerated the development of the K3 shafts to allow for the ultimate closure of the K1 and K2 shafts," said Joc O'Rourke, President and CEO. "For the last decade, we've run scenarios that relate to the early closure of these shafts. As a result of that planning, we expect to end up in a stronger position than ever in 2022."

In 2Q21, the company expects to record costs related to the following: US$20-US$25 million in brine management cash costs to cover initial efforts to manage the accelerated inflows; US$80-US$100 million in noncash charges for asset write downs for the remaining mining asset values at K1 and K2; and US$50-US$100 million in a noncash asset retirement obligation reserve increase for the permanent closure of the underground works at K1 and K2.

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