RE: Go Potash29 May 2022 13:37
Key customer export markets for Khemisset are Brazil (same for Canada and Russia/Belarus) and West Africa where spot price hit $1,200. No idea what it is now but it'll be volatile. Safe to say, $800 is the new $400. $1,000 as acceptable new basecase? - don't rule it out when 40% of global potash supply disrupted and droughts / heat damaging crops and major grain exporting regions now taken by Russia that signed a deal with China in Feb to receive its wheat exports from all regions. Whatever happens, transport costs aren't coming down and customers across industries want closer, diversified supply chains. Morocco’s geographic advantage over Canadian projects is unassailable, so to its proximity to port and simple mine design. Recall a conversation with Highfield on Muga Project where among interest from equity investors, pension funds were in the mix. This was at $400 3-4 years ago. They're attracted by very long mine life and predictable high margin production that's somewhat inflation protected. As we know, Japan, Peru, Bangladesh among Brazil and West Africa now courting Morocco for fertiliser supply. Don't know what role OCP could play - potentially a strategic investment to solve for the equity. It'll be interesting to see what EML does as its investor presentation referred to that as its "trump card". Personally see potash demand/price going higher because the damage being done today will be felt on a lagging basis, as we saw from the pandemic - food prices were at a record high pre-war in Feb. Cereal crops are vulnerable to attempts to thrift on potash, so we could see widespread failures this year and next for example. Hopefully environmental permit is granted imminently and we get news on conditional financing + other major steps to construction. Muga has its debt now agreed - smaller than Khemisset and lesser NPV but - interesting to see if Israel Chemicals also mining potash in the basin moves to buy the project.
Sign In
Follow the stocks
