By Sean Brodrick, Resource Strategist, The Oxford Club
North American potash producers got sucker-punched when Russian fertilizer giant OAO Uralkali suddenly said the price of potash could fall in a big way
Uralkali should know. At the same time it made the bold statement, it broke the news that it will back out of Belarus Potash Co. (BPC), its partnership with a Belarus-based fertilizer maker.
The end of the deal could send the price of potash, a vital crop nutrient, to the $300-a-metric-tonne range, from the current price of about $400.
After hearing the news, I called David Salisbury, chairman of /www.stockhouse.com/companies/quote/v.ppi/passport-potash-inc">TSX:V.PPI, Stock Forum).
The company is developing a potash project in Arizona’s Holbrook Basin.
Salisbury is OK with a big drop in prices. He tells me Passport can make money with prices as low as $300. Most North American producers can’t.
The price of potash has been on a wild ride. It reached $840 in 2009 before plunging to $325 in 2010. It has since gained strength and moved close to $400, but this news from Russia is just one more kick in the teeth for producers.
To the head of Passport, all this stirs a big opportunity for investors. More on that in a minute.
/www.stockhouse.com/companies/quote/pot/potash-corp-of-saskatchewan">NYSE: POT, Stock Forum), Mosaic (NYSE: MOS, Stock Forum), Karnalyte (TSX:T.KRN, Stock Forum), Western Potash (TSX:T.WPX, Stock Forum) and Agrium (NYSE: AGU, Stock Forum) are trading at fire-sale prices.
Good Investing,
Sean
F?ULL DISCLOSURE: Passport Potash is a Stockhouse Publishing client.