Agrium Temporarily Lays Off Workers and Delays Expansion Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--As a result of the current economic situation, Agrium Incorporated (NYSE:AGU) (Calgary, Alberta), the third-largest potash producer in North America, temporarily laid off nearly 300 workers at the Vanscoy potash mine in Saskatchewan from March 11 to April 8. The four-week layoff was originally scheduled to start February 10, but was postponed to March 11. An Agrium official stated that the layoff would allow the company to manage its overstocked inventory, as currently no place exists to store the mined potash. The company is trying to avoid cutting jobs, but this will depend largely on how the market rebounds in the spring.

The current market downturn has also delayed the planned $500 million potash mine and mill expansion project. As a two-phase project, the company is currently performing feasibility studies to expand and upgrade an existing 2.1 million-ton-per-year potash mine and processing plant to increase capacity by an additional 300,000 to 800,000 tons per year. Agrium expects to select an engineering and construction firm to oversee the project in the fall of 2009. Major construction is scheduled to kick off throughout most of 2011 and 2012, with production planned to begin in summer 2013. Phase II is to follow pending on the market situations at the time.

Acting on the premise that the price for potash will improve, Agrium continues to perform exploration work at four possible locations in Saskatchewan and Manitoba to construct a greenfield $2 billion, 2 million-ton-per-year underground potash mine and processing plant. The three sites in Saskatchewan are located in the Leech Lake area northeast of Melville, near Fenwood and southeast of Vanscoy. The fourth possible site is located southwest of Saint Lazare, Manitoba. By 2011, the company hopes to determine which one of the four areas is most suited for a potash-mining operation.

Agrium is a major retailer of agricultural products and services in North America and South America. Agrium produces and markets all three primary groups of nutrients: nitrogen, phosphate and potash, as well as controlled-release fertilizers and micronutrients.

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