Author Archives: prosperitysaskatchewan
K+S Proposes 82% Dividend Cut to Help Pay for Canada Legacy Mine
By Sheenagh Matthews Mar 12, 2014 6:57 AM CT
K+S AG (SDF), Europe’s largest potash supplier, suggested an 82 percent cut in its annual dividend payment, retaining part of the cash to pay for its new mine in Canada. The stock dropped as much as 3.6 percent.
The dividend proposal is 0.25 euros ($0.35) a share, a payout ratio of 11 percent based on 2013’s adjusted earnings after tax, the Kassel, Germany-based company said today in a statement. K+S, which paid 1.40 euros the previous year, plans to return to its dividend policy of paying 40 percent to 50 percent “as soon as possible,” it said today.
Chief Executive Officer Norbert Steiner is pushing ahead with the $4 billion development of the company’s new Legacy mine in Canada. K+S last month completed a test cavern, even after global potash prices fell as much as 24 percent.
“Uncertainty in the market for potash and magnesium products as well as major investments planned for the long-term strengthening of the company” are the reasons for deviating from the usual dividend policy, K+S said today.
The shares dropped as much as 90.5 cents, the steepest intraday decline in almost six weeks, to 24.145 euros in Frankfurt trading. The stock was down 2.9 percent as of 1:43 p.m. local time. K+S has gained 9 percent this year for a market value of 4.7 billion euros.
Earnings before interest, tax and excluding some hedging transactions — dubbed Ebit I by the company — declined 18 percent to 656 million euros last year, beating a 633.9 million-euro analyst estimate. Sales were 3.95 billion euros, little changed from the previous year’s level. Analysts had predicted 3.86 billion euros, according to a Bloomberg survey.
Steiner has started a 500 million-euro savings program over three years in response to lower potash prices. The bulk of the planned savings, under a program named “Fit for the Future,” will stem from material costs, though the company is also considering job cuts, K+S said in November.
Potash Corp. of Saskatchewan Inc. forecast 2014 earnings that trailed estimates in January. The Canadian company predicted profit as much as 30 percent lower than predicted in a Bloomberg survey of analysts.
To contact the reporter on this story: Sheenagh Matthews in Frankfurt at email@example.com
To contact the editors responsible for this story: Simon Thiel at firstname.lastname@example.org Robert Valpuesta
Germany’s K+S cuts dividend on potash market turmoil
Wed Mar 12, 2014 10:28am EDT
* Cuts dividend to 0.25 eur/shr amid uncertain potash market
* 2013 adjusted EBIT, sales above forecast
* Says abandons dividend payout target ratio for now
* Shares drop 1.8 pct (Adds background on potash market, Canada project, shares)
By Ludwig Burger
FRANKFURT, March 12 (Reuters) – German potash miner K+S slashed its 2013 dividend and suspended its long-term payout goal to preserve cash for a new mine it is building in Canada despite a slump in prices of the fertiliser ingredient.
The market for potash has been in turmoil since Russian producer Uralkali quit a powerful sales alliance with Belarus’ Belaruskali in July last year, leading to higher output volumes and lower prices.
K+S has remained committed to a C$4.1 billion ($3.7 billion) expansion project in Canada, planning to bring the new mine called Legacy on stream in 2016, even though lower potash prices have upset its previous funding plans.
The group, which is also the world’s largest salt supplier, said on Wednesday it would cut its 2013 dividend to 0.25 euros ($0.35) per share from 1.4 euros a year earlier. Analysts had on average expected a payout of 0.54 euros per share.
The dividend equates to just 11 percent of adjusted net profit for 2013, far below the company’s long-term goal to pay out 40-50 percent of adjusted earnings, which it said it intended to return to as soon as possible.
“Against the background of the still uncertain potash markets and especially with regard to its investments in Canada we think this was a reasonable decision of K+S to cut the dividend,” said DZ Bank analyst Heinz Mueller.
At 1400 GMT, K+S shares were down 1.9 percent at 24.585 euros, underperforming a 1.6 percent decline in Germany’s blue-chip DAX index.
K+S, which used to be a division of German chemicals group BASF, said adjusted earnings before interest and tax dropped 18 percent to 656 million euros last year, beating the average estimate of 635 million in a Reuters poll of analysts.
Full-year sales of 3.95 billion euros were also above the average forecast of 3.86 billion.
There are signs of Uralkali and Belaruskali setting differences aside to rejoin forces but Uralkali in January cut prices by 24 percent in a new semi-annual supply deal with China, one of the world’s largest importers.
Demand from India, another key potash consumer, looks set to be subdued by plans to cut potash subsidies by nearly a fifth there as the government tries to contain a ballooning fiscal deficit.
K+S sells potash mainly to European farmers but the ups and downs in prices follow the same patterns globally.
The company last month achieved a technical milestone at its Canadian Legacy mine by drilling a connection to the first cavern for extraction of potash brine solution.
It is aiming for the site to have annual output capacity of 2 million tonnes of potash by 2017, adding to the capacity of 7-7.5 million tonnes at its German mines, which face depletion in about four decades.
($1 = 0.7212 Euros)
($1 = 1.1086 Canadian Dollars) (Editing by Louise Heavens and Mark Potter)
From Brad Wall’s Facebook page today (see screen capture below):
Prime Minister Stephen Harper confirmed the free trade deal with South Korea this morning.
It includes immediate elimination of duties on our potash, wheat, flax, canola seeds & meal, mustard, rye, oats, and phase out of Korean duties against our canola oil, beef & pork.
A phase out of Korean duties on our chick peas and lentils over 3-5 years is also part of the trade deal. A small amount of Saskatchewan potash is sold in South Korea without duty, but up to 6.5% could be charged at any time. The FTA reduces this to 0%.
This is a good deal for Saskatchewan and Canada’s 1st free trade agreement in Asia.
CP’s Hunter Harrison ‘irate’ over Ottawa’s grain-moving order
The Globe and Mail
Published Wednesday, Mar. 12 2014, 12:37 PM EDT
Last updated Wednesday, Mar. 12 2014, 12:43 PM EDT
The head of Canadian Pacific Railway Ltd. says he’s “irate” over federal politicians’ criticism of his company’s grain shipping during a harsh winter and plans to meet “eyeball to eyeball” with them to discuss it.
Ottawa last week imposed an order on the country’s two railways requiring they double shipments of wheat, canola and other crops to clear a backlog that has left prairie grain elevators at capacity and hammered farmers’ cash flow. Agriculture Minister Gerry Ritz said the railways “dropped the ball” and assured the agricultural sector the federal government would force the companies to get the record crop to market.
Grain farmers and the companies that buy and sell their crop have been complaining for months about poor service from CP and Canadian National Railway Co.
The federal government responded last week by giving the railways four weeks to begin shipping a combined one million tonnes of grain every week or face a fine of $100,000 a day. It has also told the government appointed traffic monitor to more closely track grain car movements.
CN said last week it was prepared to meet the government’s “challenge,” but said it need the co-operation of other players in the supply chain – including the operators of the elevators and port terminals.
Mr. Harrison told a transportation conference in New York on Wednesday the government’s move was a political “sideshow” that had little to do with moving grain. He said the order was a misguided response to the coldest winter in years, which made it impossible to operate full-length trains safely.
“I’ve been doing this for 40 years and I’ve never seen anything like this,” he said of the extreme cold and snow that snarled much of the transportation system in western Canada.
Mr. Harrison cast doubt on grain industry claims the crop of 80 million tonnes is the new normal, but said it’s “wonderful” if that is the case. “Obviously we’ve got all the grain we want to haul.”
Since taking the helm at CP, Mr. Harrison has taken steps to make the railway more efficient, retiring 400 locomotives and 11,000 rail cars while cutting staff by 4,800. He said the move “from the bottom to the top” has involved a change of culture and leadership, adding “the plan has come together pretty well.”
CP’s 2013 profit rose by 80 per cent to $875-million. CP estimates revenue will climb by 6 to 7 per cent this year, and more share buybacks could be in store as cash flow increases. It is also planning to sell real estate worth about $2-billion.
Subsidy cut to cap India’s 2014/15 potash imports
* Subsidy cut to keep local prices elevated, demand dampened
* India likely to sign import deals by March-end
* Imports seen at 3.5 mln tonnes in 2014/15-industry official
By Rajendra Jadhav
MUMBAI, March 12 (Reuters) – India’s potash imports in 2014/15 are likely to remain squeezed despite a 20 percent drop in global prices as the government’s plan to cut subsidy will keep local retail prices elevated, a senior industry official told Reuters in an interview.
The south Asian country fulfils its entire potash requirement through imports and global suppliers were banking on recovery in its demand to counter the slump in prices.
“Since the government is cutting subsidy, I think India can buy around 3.5 million tonnes in 2014/15,” said P.S. Gahlaut, managing director, Indian Potash Limited, the country’s biggest importer. Indian financial year runs from April to March.
India will cut potash subsidies by nearly a fifth for 2014/15 as the government tries to contain a ballooning fiscal deficit, two government sources and an industry official told Reuters last month.
Higher retail prices have already seen a drop in India’s annual potash imports to around 3.3 million tonnes in 2013/14 from 6.3 million tonnes in 2010/11, Gahlaut said.
Retail potash prices have doubled since 2011 to 17,000 rupees a tonne as India cut subsidies over the last two years, including a 21.5 percent reduction in 2013/14, and due to a weak currency.
Global potash prices were thrown into a tailspin after Russia’s Uralkali broke away from its trading venture Belarusian Potash Company (BPC) in July, sparking competition between producers who had previously maintained a high discipline on pricing.
Global potash miners like Potash Corp, Mosaic Co , Agrium Inc, Germany’s K+S AG, Arab Potash Co and Israel Chemicals were hoping strong demand from price-sensitive Indian market in 2014.
Negotiations with global potash suppliers are likely to start from next week and import deals can be signed by the end of March, said Gahlaut, a key Indian negotiator with overseas suppliers.
He said India is likely to secure potash at the same price China bought from global suppliers earlier this year.
“We will pay the same price for potash as China has paid. Because of freight and smaller shipments, usually India pays a slightly higher CFR price than China, but FOB price would remain the same for potash suppliers,” he said.
Uralkali, the world’s top potash producer, has agreed to sell 700,000 tonnes of potash to China at a price of $305 per tonne on a cost and freight (CFR) basis in the first half of 2014.
In the first half of 2013/14 India bought potash at $427 per tonne, but after the break-up of BPC it secured discounts for existing deals to $375.
Canada’s mining industry supports new free trade agreement with S Korea
By: Henry Lazenby
11th March 2014
TORONTO (miningweekly.com) – The Mining Association of Canada (MAC), on Tuesday voiced support for Canadian Prime Minister Stephen Harper’s announcement that Canada and the Republic of Korea had concluded negotiations for a bilateral free trade agreement that would significantly boost trade and investment ties between the two countries.
The free trade agreement, Canada’s first with an Asian market, was expected to create thousands of new jobs in Canada and provide Canadian businesses and workers with a gateway to Asia, enhancing their global competitiveness. It would also level the playing field for Canadian companies competing with Korea’s other trading partners, including the US and the EU, who already have free trade agreements with Korea.
“Our government recognises the importance of opening new markets for Canadian goods, services and investment, which is why we launched the most ambitious trade agenda in Canadian history. The Canada-Korea free trade agreement will create jobs and open the door to the lucrative Asia-Pacific market for Canadian businesses.
“The Canada-Korea free trade agreement not only reflects the input of all sectors of the economy, provinces and territories, it will deliver significant benefits for Canadians from coast to coast to coast,” Harper said.
Canadian consumers would benefit from a greater variety of goods at lower prices, as the agreement would cover virtually all aspects of Canadian-Korean trade, including goods and services, investment, government procurement, environment and labour cooperation, and other areas of economic activity.
The agreement eliminates tariffs and reduces non-tariff measures that hinder market access for Canadian exporters and investors in Korea, bringing transparency and predictability to the business environment. Once the agreement had been fully implemented, Korea would remove duties on 98.2% of its tariff lines, covering virtually all of Canada’s imports.
Korea is a key market for Canada – it is the world’s 15th-largest economy with a gross domestic product of $1.1-trillion, and the fourth-largest in Asia, with a population of 50-million people.
Korea is already Canada’s seventh-largest merchandise trading partner and its third-largest in Asia, after China and Japan. Total merchandise trade between the two countries reached about $10.1-billion in 2012.
Tariff elimination would be particularly advantageous for Canadian businesses, as average Korean tariffs are three times higher than Canada’s.
The MAC said that the agreement was of specific interest to the Canadian mining industry, owing to its reduction in tariffs, which were currently upwards of 8% for metals including iron, aluminium and nickel.
“Given the global nature of our sector, the Canadian mining industry is highly supportive of the formation of new trade agreements. The mining industry welcomes today’s announced free trade agreement with South Korea given the region’s importance as a sizeable market for many Canadian mineral and metal exports,” MAC president and CEO Pierre Gratton said.
In 2012, the total value of Canadian mineral exports to South Korea exceeded $1.8-billion. By value, coal is the most significant mining product exported, amounting to more than $1.1-billion in 2012, followed by aluminium, copper, nickel and zinc.
“We congratulate the government of Canada on reaching this important agreement. Today’s announcement represents a significant milestone in Canada’s continued efforts to enhance market access for our products across the Asia Pacific,” Canadian diversified miner Teck Resources president and CEO Don Lindsay said.
Gratton added that access to strategic markets and the free flow of goods is critical for the Canadian mining industry’s ability to compete on the world stage.
“We encourage the federal government to continue with its active trade agenda through negotiating and, where possible, finalising free trade agreements, double taxation agreements and foreign promotion and protection agreements with other emerging markets,” he said.
Canada had in December also inked two new Foreign Investment Promotion and Protection Agreements (FIPAs) with Tanzania and Guinea.
Africa also is a significant destination for mining, capturing 16% of global exploration investment in 2012, according to SNL Metals Economics Group. In the same year, the TSX and TSX-V exchanges accounted for $1.7-billion in equity capital raised for African mining projects in 28 countries on the continent.
Map included at bottom from http://www.gov.sk.ca/adx/aspx/adxGetMedia.aspx?mediaId=051cd608-4adf-4f1a-9078-c1eb83eea075&PN=Shared
March 11, 2014
WATER SECURITY AGENCY RELEASES MARCH FORECAST FOR SPRING RUNOFF
Central Region of the Province Continues to be Above Normal
Today, Minister responsible for the Water Security Agency Ken Cheveldayoff released the March forecast and outlook on spring runoff. The forecast ranges from well above normal near Prince Albert in the central portion of the province to below normal in south west.
“Central Saskatchewan, from Saskatoon and North Battleford to Prince Albert and Melfort, is expected to see an above normal to well above normal runoff in certain areas,” Cheveldayoff said. “We continue to monitor the situation and the Water Security Agency will be doing targeted snow surveys to verify the amount of snow in these regions.”
Peak flows on the Saskatchewan River system are largely determined by alpine snow accumulation and spring/early summer rainfall in the mountains. If the normal amount of precipitation is received, flows are expected to be above normal for the North Saskatchewan and South Saskatchewan Rivers, but not cause flooding. Ice jams during the spring runoff on any river system can cause local flooding regardless of the forecasted flow.
Spring runoff depends on a number of factors: moisture conditions from the fall; snow accumulation from the winter; the rate of melt in the spring; and the amount of rainfall during the runoff. Above normal precipitation prior to spring runoff and/or a fast melt could result in higher flows and significantly alter the forecast.
The Water Security Agency will continue to provide updates as the spring runoff progresses. The complete forecast including projected lake levels and stream flows is available at http://www.wsask.ca.
The Water Security Agency was created to lead implementation of the 25 Year Saskatchewan Water Security Plan. It will improve water management capacity and service to individuals, businesses and communities across Saskatchewan. The Agency brings together all of the major responsibilities related to water quality and quantity.
For more information, contact:
Water Security Agency
March 11, 2014
SASKATCHEWAN WELCOMES CANADA-KOREA FREE TRADE DEAL
Premier Brad Wall congratulated Prime Minister Stephen Harper on today’s announcement of the conclusion of negotiations on a free trade agreement between Canada and Korea.
The agreement which the prime minister reached with Korean President Park Geun-hye is the first free trade deal that Canada has secured in Asia.
“The Canada-Korea Free Trade Agreement is significant on several levels,” Wall said. “For Saskatchewan, the agreement is a real opportunity as it provides a larger market in Asia for our grains, oilseed, beef and pork producers. This agreement shows that Canada is pivoting to the fast-growing Asian markets and I applaud the federal government for its efforts in that regard. The agreement with Korea must be a stepping-stone to pursue greater trade liberalization across the region.”
Total Canadian agriculture exports to Korea dropped by 65 per cent from just over $1 billion in 2011 to about $370 million in 2013 – a period during which both the European Union and the United States launched free trade agreements with Korea. Saskatchewan agri-food exports fared even worse, going from over $225 million in 2011 to approximately $50 million in 2013 – a decrease of nearly 80 per cent.
“For agricultural producers, this agreement will enable them to regain market share lost to American, European and other international competitors because of free trade agreements those countries already have with Korea,” Agriculture Minister Lyle Stewart said.
Over time, this agreement is expected to correct the competitive disadvantage exporters have experienced relative to their competitors in the United States and the European Union.
In 2011, the last year before the U.S. signed its free trade agreement with Korea, Saskatchewan exported $195 million of wheat to Korea. Last year, wheat exports had fallen to $33 million (more than 80 per cent drop) due to the favorable terms that our U.S. competitors had in Korea.
The same is true for canola oil. In 2011, Saskatchewan exported $22 million to Korea, but by 2013 this had fallen to $3 million (about 85 per cent drop), again due to favorable terms that the US had in its free trade agreement.
“We’ve always been a province of traders,” Minister responsible for Trade Tim McMillan said. “And efforts to further open up international markets can only lead to a stronger and more dynamic Saskatchewan economy.”
For more information, contact:
Fukushima and Chernobyl: Myth versus Reality
In 2012 WNA released a video where radiation experts from the UN Scientific Committee on the Effects of Atomic Radiation (UNSCEAR), the International Commission on Radiological Protection (ICRP) and the Chernobyl Tissue Bank discuss the effects of radiation from a nuclear accident.
To see the video go to: http://world-nuclear.org/Features/Fukushima/Fukushima-and-Chernobyl—Myth-versus-Reality/
RIP commodity supercycle, 2002-2014
The Globe and Mail
Published Monday, Mar. 10 2014, 6:20 PM EDT
Last updated Tuesday, Mar. 11 2014, 8:08 AM EDT
Metals prices in China were crushed Monday as the country’s economic numbers continued to drive nails into the coffin of a global commodity supercycle that has enriched so many Canadians since 2002.
Copper prices in Shanghai fell 5 per cent Monday after the government released trade statistics showing an 18.1-per-cent year-over-year decline in exports. The copper price now stands 8.6 per cent below highs hit on Feb. 17.
Commodity price carnage was also apparent in iron ore. The spot price fell 8.3 per cent Monday, and is now lower by 20 per cent year to date.
The export data was extremely disappointing to economists who had predicted a 7.5-per-cent increase. Seasonal factors were definitely in play – Chinese New Year celebrations always skew the early-year data. Even so, the number is easily soft enough to confirm the economic weakness suggested by a March 2 PMI report that showed a contraction in manufacturing activity.
Economists expect that China’s gross domestic product growth will reach the government target of 7.5 per cent this year, so at first glance the recent volatility in commodity markets makes little sense.
The falling Chinese yuan and the end of the unwinding of the U.S. dollar carry trade is the likely culprit. It’s getting less attention than the trade numbers, but the People’s Bank of China also paved the way for further weakening in the yuan during the weekend.
The prospects for a sustainably weaker yuan threaten to depress China’s commodity demand even if the country hits economic growth targets.
In the past, commodity trading has been a popular way for Chinese corporations to gamble on a strengthening Chinese currency. Government capital controls prevented most companies from borrowing in U.S. dollars, but resource businesses were the exception.
Chinese commodity businesses are permitted to borrow U.S. dollar funds to buy metals in New York and London. These companies then sell the copper, iron ore or oil in domestic markets, and invest the yuan-denominated proceeds in high-yielding domestic investments.
The profits from this trade have two sources. Suppose, for instance, that a Chinese company borrowed U.S. dollars from a Hong Kong bank at 2 per cent interest, bought and sold copper, then invested the proceeds in 10-year Chinese government bonds yielding 4 per cent. The difference between the amount of regular loan payments and the coupon payments on the bonds is one source of profit.
The second source of profits on this carry trade, a declining greenback, doesn’t exist any more. Until the U.S. dollar began rallying last May, a Chinese company exercising the hypothetical trade above would find it cheaper to repay the U.S. dollar bank loans when they came due.
The rising risks that the yuan will continue to fall against the dollar makes the borrow-greenbacks-to-buy-yuan-assets trade far less appealing. Trading companies no longer have an incentive to buy resources to circumvent capital controls.
China’s economic growth is still the envy of most of the world, but the expected 7.5 per cent pace is far below the 12-per-cent peak rate in 2010. Declining construction activity has already seen Chinese rebar prices fall to levels last seen during the financial crisis.
The combination of slowing growth and the end of the carry trade is a double whammy for global commodity demand and broader resource prices. Increased production of copper and iron ore will make matters worse still.
For Canadian investors, the implications couldn’t be clearer. The Chinese government could open the credit spigots again to spur growth temporarily, but for all intents and purposes, the commodity supercycle is over. Investors should take advantage of any strength in mining stocks to reduce portfolio exposure.