SASKATOON -- The Mosaic Company announced Tuesday 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 company said in a news release.
"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," President and CEO Joc O'Rourke said in the release.
"In 2020, we continue to expect robust global fertilizer demand and strong business conditions."
The shutdown began in August, with Mosaic issuing 395 layoff notices, though the company said 52 of those workers would stay on to keep the operation on standby in case market conditions improved. The move came after unprecedented wet spring weather in North America disrupted the planting season and affected fertilizer demand, though potash prices still rose.
The idling sees Mosaic writing off around $530 million, mainly 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, according to the release.
The write-off also includes cash severance charges of $15 million to $20 million.
