Nutrien Ltd. has announced that it plans to increase fertiliser production capability in response to structural changes in global energy, agriculture and fertiliser markets.
The company hosted a virtual investor update meeting this week to provide details on its strategic growth and capital allocation plans.
Ken Seitz, Nutrien’s interim president and CEO said: “The challenge of feeding a growing world has never been clearer as global supply constraints have contributed to higher commodity prices and escalated concerns for global food security.
“There is no simple or fast solution to overcome this challenge and we see potential for multi-year strength in agriculture and crop input market fundamentals.
“Nutrien’s integrated business is best positioned to respond to these supply challenges and help sustainably feed a growing world.”
Nutrien plans to bring on additional “low-cost potash and nitrogen production” from its existing fertiliser production facilities.
Potash production at fertiliser company
Nutrien is accelerating the ramp-up of its annual potash production capability to 18 million tonnes by 2025 in response to the uncertainty of supply from Eastern Europe.
This represents an increase of more than 5 million tonnes, or 40%, compared to the company’s production in 2020.
Nutrien has said that the acceleration pathway is through existing low-cost capacity that it claims is unmatched in the industry and supported by world-class global logistics infrastructure.
The incremental production capability is expected to be added at a similar annual pace to the additions over the past two years.
To boost production, the company will hire and train approximately 350 people and invest in underground mining equipment, mine development, storage and loadout capacity.
Nutrien said it continues to evaluate additional low-cost brownfield expansion opportunities beyond 18 million tonnes at its Saskatchewan mines that would supply longer-term market demand growth.
Nitrogen portfolio
Nutrien is advancing previously announced brownfield expansion projects that are expected to add approximately 500,000t of capacity by the end of 2025 and further enhance the energy efficiency and product mix of its plants.
It is also evaluating the potential for additional low-cost brownfield expansion and emissions reduction projects with a final investment decision expected over the next 12 months.
Last month, Nutrien announced it is evaluating its existing site at Geismar, Louisiana in the US to build the world’s largest clean ammonia facility.
The project would leverage low-cost natural gas, tidewater access to world markets, and high-quality carbon capture and sequestration infrastructure to serve growing demand in agricultural, industrial and emerging energy markets.
The plant would have an annual production capacity of 1.2 million tonnes of clean ammonia and capture at least 90% of carbon dioxide (CO2) emissions.
Nutrien said that its annual nitrogen sales volumes could increase to approximately 13.5 million tonnes by 2027 through the completion of inflight brownfield projects and additional growth projects under evaluation.
Share buyback
Nutrien is planning to repurchase an additional $2 billion of shares, for a total of approximately $4 billion of repurchases in 2022.
This is expected to increase the company’s total return of capital to shareholders through dividends and share repurchases to approximately $5 billion in 2022.
Pedro Farah, Nutrien’s executive vice president and chief financial officer (CFO) said: “The strength of our expected cashflow provides an opportunity to accelerate our strategic growth initiatives and return significant cash to shareholders.
“The additional planned share repurchases reflect our confidence in Nutrien’s near-term earnings and the potential for a more robust long-term outlook.”
Nutrien is the world’s largest provider of crop inputs and services and says that it is helping growers increase food production in a sustainable manner.
It produces and distributes approximately 27 million tonnes of potash, nitrogen and phosphate products worldwide.
