Mosaic announces indefinite idling of the Colonsay Mine

"The ramping up of our Esterhazy K3 production combined with continued weak demand in North America has left Mosaic's potash business with excess inventory and production capacity. This decision will regrettably impact employees, but allows us to optimise our Canadian production assets and improve our cost position in a competitive market," said President and CEO Joc O'Rourke. "In 2020, we continue to expect robust global fertilizer demand and strong business conditions."

The idling will result in a fourth quarter 2019 pretax charge of approximately US$530 million, primarily noncash charges for asset write-offs, and inclusive of cash severance charges of US$15 million to US$20 million. The write-off is principally the carrying value of the 2013 expansion project, which increased Colonsay's operating capacity to 2.1 million t. Colonsay has been operating with a modified 1.5 million t capacity since 2016, and the company does not expect to use the expansion capacity for the foreseeable future.

These same market conditions that impacted potash, primarily a third consecutive weak application season in North America, also impacted phosphates. Average realized phosphate price continued to decline in the fourth quarter of 2019, impacting the annual goodwill impairment analysis and leading the company to expect a write-off of up to US$590 million of phosphates segment goodwill. The company plans to treat charges related to the idling or changes in goodwill balances as notable items.

Read the article online at: https://www.worldfertilizer.com/potash/30012020/mosaic-announces-indefinite-idling-of-the-colonsay-mine/