TAMPA, FL / ACCESSWIRE / January 28, 2020 /The Mosaic Company (NYSE:MOS) today announced that it intends to keep its Colonsay potash mine idled for the foreseeable future. The mine will be placed in care and maintenance mode, employing minimal staff and allowing for resumption of operations when needed to meet customers’ needs.
“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 optimize 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 $530 million, primarily noncash charges for asset write-offs, and inclusive of cash severance charges of $15 million to $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 tonnes. Colonsay has been operating with a modified 1.5 million tonnes 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 $590 million of Phosphates segment goodwill. The company plans to treat charges related to the idling or changes in goodwill balances as notable items.