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Mosaic Company announces 2Q19 results and idles production at Colonsay potash mine

Published by
World Fertilizer,


The Mosaic Company hasannounced that the unprecedented wet weather in the Midwest Us has negatively impacted its North American spring fertilizer sales volumes and phosphates margins. These same factors have driven grain prices higher and provide significant opportunities in fall 2019 and beyond.

“We’ve experienced a North American spring season that was wetter and later than any in recorded history,” said Mosaic President and CEO Joc O’Rourke. “While our potash and Mosaic Fertilizantes businesses continued to perform well, weakness in the phosphates market negatively impacted second quarter results. Moving forward, strong price increases in grains together with depleted soil nutrients in North America are expected to drive fertilizer applications significantly higher this fall.

“The actions we’ve taken to reshape our business, including the permanent closure of our Plant City phosphates facility and the acceleration of the development of the K3 potash mine leading to today’s announced curtailment of potash production at Colonsay, are expected to increase our operating leverage to the anticipated strong market fundamentals in 2H19 and beyond.”

Mosaic reported a net loss of US$233 million for 2Q19, including a US$284 million noncash after-tax charge for the permanent closure of the company’s Plant City phosphate facility. The company reported diluted earnings per share (EPS) of negative US$0.60, which includes a negative US$0.72 per share impact for notable items, primarily the closure of the Plant City facility. For the period, adjusted EBITDA(1) was US$349 million, and adjusted EPS(1) was US$0.12.

Highlights:

  • Mosaic Fertilizantes plans to complete tailings dam remediation activities and return to full operations more than a month ahead of schedule:
  • - The Catalão mine tailings dam remediation was completed, and the mine resumed full operations in May.
    - The Tapira mine resumed operations at 60 percent in July, and is expected to resume full operations in August.
    - The Araxá mine received an operating permit for tailings dam B6, and is expected to resume full operations in August.
  • The company expects Mosaic Fertilizantes to achieve its targeted US$275 million in net synergies in 2019, despite challenges related to the new Brazilian tailings dam regulation.
  • The potash segment delivered gross margin per tonne of US$84 as cash costs per tonne declined sequentially, despite a lower operating rate as a result of slower sales in the quarter.
  • The accelerated ramp up of the low-cost Esterhazy K3 potash project is on schedule, having produced over 400 000 t of ore year-to-date 30 June 2019. This production, combined with available inventory, facilitated the temporary idling of the higher cost Colonsay potash mine. These actions are expected to lower Mosaic’s cost of production, accelerate inventory depletion, avoid US$40 to US$50 million in cash expenditures in 2019, and increase the company’s leverage to strengthening markets into 2020.
  • In June, the company announced the permanent closure of the Plant City phosphates facility. The closure will result in lower idle plant costs and cash expenditures to be incurred for the care of the facility.
  • The company revised its full-year adjusted EBITDA(1) guidance to US$1.8 to US$2.0 billion. Mosaic announced adjusted EPS(1) guidance of US$1.10 to US$1.50, primarily reflecting the impact of lower than expected sales volumes in the first half of 2019 and a slower recovery of phosphates margins.

Read the article online at: https://www.worldfertilizer.com/potash/07082019/mosaic-company-announces-2q19-results-and-idles-production-at-colonsay-potash-mine/

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