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Mosaic Declares Production Disruption at Esterhazy Mine

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Mosaic Company (MOS - Free Report) recently announced a production outage at its Esterhazy K2 potash mine in Saskatchewan. This incident is likely to reduce production by 200,000–300,000 tons.

Although the production disruption is unlikely to impact first-quarter potash results, the company expects a negative impact on its second-quarter sales volumes. The outage is expected to have been caused by a skip, a device that transports potash to the surface. Mine operations are expected to resume shortly.

Mosaic has outperformed the Zacks categorized Fertilizers industry over the past six months. The company’s shares have rallied around 18.4% over this period compared with roughly 12% gain recorded by the industry.



The company is a global leader in potash and remains committed to expand its annual potash production capacity. It is making a good progress with capacity expansion at Esterhazy (the K3 project) with deliveries from the expansion is expected in 2017.

Mosaic is gaining from its cost reduction measures, which is helping it to offset headwinds from depressed nutrient prices. The company remains on track with its $575 million cost-cutting program, leading to an improvement in its operating cost structure.

Mosaic also sees improving global demand for nutrients. The company sees a more stable operating environment in 2017 and anticipates higher demand for both phosphate and potash.

The buyout of CF Industries’ assets also expands Mosaic’s phosphate business and production capacity of the nutrient in Florida. The acquisition will bring Mosaic’s annual phosphates capacity to roughly 11.5 million tons. Moreover, the $2.5 billion buyout of Brazil-based Vale S.A.’s Vale Fertilizantes business is expected to help the company to capitalize on the rapidly growing Brazilian agricultural market and improving business conditions. It is projected to generate more than $80 million of post-tax synergies.

Mosaic Company (The) Price and Consensus

Mosaic currently carries a Zacks Rank #2 (Buy).

Stocks to Consider

Other favorably placed companies in the basic material space include The Chemours Company (CC - Free Report) , BHP Billiton Limited (BHP - Free Report) and Kronos Worldwide Inc (KRO - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected long-term growth rate of 15.5%.

BHP Billiton has an expected long-term growth rate of 5.6%.

Kronos Worldwide has an expected long-term growth rate of 5%.

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