Germany's K+S eyes wide cost cuts after potash uncertainty -sources

Reuters

By Markus Wacket

BERLIN, Oct 25 (Reuters) - German miner K+S, hitby uncertainty over the price of potash fertiliser, is lookinginto cutting its annual costs by hundreds of millions of euros,two people familiar with the discussions told Reuters on Friday.

Shares in K+S have lost more than 30 percent of their valuealongside global peers after one of the world's two large potashcartels collapsed in July, stoking expectations of a slump inprices of the key fertiliser mineral.

The supervisory board of K+S is discussing measures at ameeting on Friday that could amount to cost cuts of less than400 million euros ($550 million), one of the people said.

The company has annual costs of close to 3 billion euros,about 900 million of which are for personnel expenses.

K+S declined to comment. It has said it would publish moredetails on the cutbacks on Nov. 14, when it is due to releasethird-quarter results.

K+S, the largest independent potash supplier outside theformer Uralkali-Belaruskali pact and a Canadian alliance aroundPotash Corp of Saskatchewan, said in August it wouldstep up efforts to cut costs in anticipation of lower prices forits fertiliser minerals.

Russia's Uralkali, which has abandoned an exportjoint venture with Belaruskali, had predicted a decline of morethen 25 percent in the potash price to below $300 per tonne.

It remains unclear whether rival Uralkali and Belaruskaliwill settle their dispute and resume joint shipments, whichwould bolster potash prices, but Uralkali has recently retractedits previous outlook of potash prices below $300 per tonne,saying robust demand would lead to prices above that level.

In response to its limited German reserves, the Germanycompany is preparing to expand in Canada.

It has remained committed to the C$4.1 billion ($3.9billion) investment and plans to bring a new mine on streamthere in 2016 even after uncertainty over potash prices upsetits previous funding plans.

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