Canpotex secures potash demand from Indonesia

North American potash selling consortium, Canpotex, will be shipping larger amounts of the fertilizer to Indonesia after the five-year potash supply deal signed Tuesday between the offshore selling agency and Southeast Asian buyers.

“Indonesia is one of the most exciting, rapidly growing potash markets in the world and Canpotex is the largest supplier of potash to this important market,” Canpotex president and CEO Steven Dechka said in an e-mailed statement.

In the last five years, potash imports to Indonesia have increased 85%. About 50% of recorded shipping of the soil nutrient from Canada comes from Saskatchewan.

Securing potash buyers for the the long-term it's a smart move as recent studies suggest worldwide reserves of potash could surpass demand by 59% to 100% by 2020.

Netherlands-based global financial service Rabobank warned in June that Canpotex and its European counterpart BPC were not likely to sit back and watch while new players inject additional quantities of the fertilizer into the global market.

One of the key variables, according to the "Playing the Potash Field" report by Rabobank, will be the degree to which Brazil, India and China – collectively were responsible for 40% of total potash imports in 2011 – are prepared to endure uneconomic projects to secure supplies either domestically or by investing in overseas developments.

Canada has one of the world's largest supplies of potash in western Saskatchewan. The province expects potash royalties to bring in at least $705 million this year.