K+S increases capital expenditures for new potash plant in Canada

Mon Apr 22 13:08:00 CEST 2013

  • Basic engineering of the Legacy Project further advanced
  • Supervisory Board agrees to decision of the Board of Executive Directors for raising the capex budget to 4.1 billion CAD
  • Production capacity of 2 million tonnes will be available as planned by 2017
  • Commissioning in summer of 2016 (so far end of 2015) expected
  • Financing of the still economically attractive and strategically important potash project secured

K+S is committed to continuing the construction of the new potash plant in the Canadian province of Saskatchewan. This includes the basic engineering and cost analysis of the major subprojects which is now at an advanced stage. The Supervisory Board which is always promptly and closely involved in all phases of the project has approved the decision of the Board of Executive Directors to increase the capex budget for the new plant to 4.1 billion CAD (about 3 billion €). The so far assessed 3.25 billion CAD were based on the feasibility study conducted in November 2011.

The now presented plan includes investments into K+S’s own infrastructure, modifications of plant components and infrastructure as well as increased material and labor costs. The adjustments to the budget were identified in a very early stage of the project. “The additional findings strengthen the predictability, transparency and controlling as well as our major project overall,” says Norbert Steiner, Chairman of the Executive Board of Directors of K+S.

“In the future, the new plant will be the main source for distributing to the emerging regions in Asia, South America and as well to North America. Legacy strengthens the K+S Group’s competitiveness and opens attractive prospects for many decades,” Steiner emphasizes. “Legacy is an important part of the future of K+S. Taking all data of the profitability calculation into account the project is economically attractive and still fulfills the requirement of the Group, to earn a 15% premium on the cost of capital before taxes. The K+S Group has a solid balance sheet. The Financing will be ensured by existing liquidity, future cash flows and new debt. “The dividend policy of the company will remain unaffected by the decision to increase the capital expenditure,” Steiner concludes.

With the expected commissioning in summer 2016 the company still projects to reach the two-million-tonnes-mark of production capacity at the new location at the end of 2017. The gradual extension of the annual capacity to 2.86 million tonnes of potash products will occur afterwards. So far the company assumed a production start at the end of 2015. The annual production capacity of the existing K+S sites is up to 7.5 million tonnes of potash and magnesium products.

View at the first well field rig on the Legacy construction site which has been in operation since the beginning of 2013.

About the Legacy Project

Legacy is a greenfield project for the setting up of a potash production on the basis of solution mining in the south of the Canadian province of Saskatchewan. With Legacy K+S will be the only potash producer with large and own production facilities on two continents. The new potash plant will complement the German production network, reduce the average production costs and extend the average lifetime of the mines. In addition, Legacy will strengthen K+S’s competitiveness significantly which will bolster the total K+S Group as a result. More information about the Legacy Project at www.ks-potashcanada.com.

Experience growth

K+S is one of the world's leading suppliers of standard and speciality fertilizers. In the salt business, K+S is the world’s leading producer with sites in Europe as well as North and South America. K+S offers a comprehensive range of goods and services for agriculture, industry, and private consumers, which provides growth opportunities in virtually every sphere of daily life. Worldwide, the K+S Group employs more than 14,000 people. The K+S share – the commodities stock on the German DAX index – is listed on all German stock exchanges (ISIN: DE000KSAG888, symbol: SDF). More information about K+S at www.k-plus-s.com.

Your contact persons

K+S Potash Canada
Christine Jefferies
Phone: (306) 385-8024
E-mail: christine.jefferies@ks-potashcanada.com

K+S Group
Michael Wudonig
Phone: +49 561 9301-1262
E-mail: michael.wudonig@k-plus-s.com