PotashCorp no longer producing DFP at Aurora site

Published 5:17 pm Monday, October 30, 2017

AURORA — Changes in production at PotashCorp-Aurora brought fluctuation within the plant, but no job losses as a result.

PotashCorp, based in Saskatoon, Saskatchewan, Canada, elected to halt production of defluorinated phosphate, a feed additive used to promote animal production and poultry breeding.

The kiln used to manufacture DFP at the Aurora site is now out of service, causing a $29 million non-cash impairment charge listed in the corporation’s third-quarter report, according to Randy Burton, director of public relations and communications at PotashCorp’s corporate offices.

A non-cash impairment charge is essentially an expense affecting a company’s income, but does not involve the flow of cash. The Aurora kiln is considered a capital loss in earnings due to its disuse, but no actual money is moved out of PotashCorp’s income statement.

“The staff at Aurora who were working on the DFP process have been reassigned to other areas of the operation,” Burton said.

According to Burton, PotashCorp will now supply customers with a similar feed product, monocalcium phosphate, which is less expensive to manufacture. The company’s plant at Marseilles, Illinois, will be the primary manufacturer of MCP.

“It is no longer economic to produce (DFP) in today’s challenging phosphate market,” Burton explained.

PotashCorp has weathered a slump in the phosphate market since late 2016. The company’s Chief Executive Officer Jochen Tilk attributed the slump to a hurting liquid fertilizer market, which utilizes phosphoric acid, and more competition in the dry feed market.

Although officials hoped to see an uptick this year, improvements have not come. In its third-quarter report, PotashCorp listed its phosphate gross margin at -$45 million, a decrease of $60 million when compared to the third quarter of 2016.

The report attributed this drop to ongoing weaker market prices, as well as the $29 million impairment related to the Aurora kiln.

“While prices for (phosphate-related) industrial products were relatively flat during the quarter, feed prices remained under pressure due to the impact of increased supply from offshore producers, keeping them well below prior-year levels,” according to a press release.

A struggling phosphate market and the changes at the Aurora site come as PotashCorp continues its merger with agricultural supply company Agrium Inc. The merger is still expected to reach completion by the end of this year.