UPDATE 1-Fertilizer producer Mosaic to defer potash expansion1 hour ago by Thomson Reuters
* Company to defer 2 million-ton expansion until markets improve
* Expects $2 bln surplus cash, $3 bln debt capacity as of May 31
* Favors share buybacks over dividends
* Shares fall 4 percent
May 13 (Reuters) - Mosaic Co, the second-largest fertilizer producer in North America, will delay plans to expand potash production in Western Canada due to unfavorable market conditions, a company executive said.
Shares of the company fell as much as 4 percent to $60.73 on the New York Stock Exchange on Monday.
"The final 2 million tons of our potash expansion strategy are being deferred," Chief Financial Officer Larry Stranghoener said on a conference call with analysts.
"When market conditions warrant, and when risk-adjusted returns justify them, we expect to reinitiate these projects."
Several of the world's major potash producers, including Canadian rival Potash Corporation of Saskatchewan, have expanded their mines to capitalize on demand for the crop nutrient, which improves root strength and disease resistance.
But some analysts have said there is too much new global capacity in the works. Vale SA said in March that it planned to pull out of a $6 billion potash project in Argentina.
Mosaic, the world's largest producer of finished phosphate products, said it expected to have about $2 billion in surplus cash as of May 31 and a further $3 billion of debt capacity.
In a filing with the U.S. Securities and Exchange Commission, Mosaic said it would prefer to use surplus cash to repurchase shares than to pay out dividends. ()
Plymouth, Minnesota-based Mosaic, which has a market capitalization of about $27 billion, was split off from agribusiness giant Cargill Inc two years ago.