SASKATOON - Potash Corp. of Saskatchewan Inc. (TSX:POT) has settled a lawsuit with U.S.-based rival Mosaic that resolves a dispute over ownership of production from the Esterhazy mine in southeastern Saskatchewan.
The two producers have clashed over production from the mine for several years, with the Saskatchewan-based PotashCorp claiming it is owed the processed potash ore under an agreement originally reached in 1971 that stipulates Mosaic send it 1.1 million tonnes from the mine per year.
"This settlement provides PotashCorp and its stakeholders with certainty through 2012 and dovetails with our ongoing potash expansion program, which will increase operational capability to 17.1 million tonnes by 2015," PotashCorp president and CEO Bill Doyle said in a statement.
Under the settlement announced Thursday, Minnesota-based Mosaic will deliver tonnage owed to PotashCorp for 2011 and 2012 — which PotashCorp has claimed is worth more than $1 billion over the final two years of the agreement.
At the end of 2102, production capacity from Esterhazy will be reallocated to Mosaic. The settlement also dismisses a counterclaim from Mosaic.
PotashCorp is the world's largest fertilizer producer. The company became the target of a nearly US$40-billion hostile takeover offer by Anglo-Australian mining giant BHP Billiton in 2010 that ultimately was rejected by the federal government rejected the offer on the grounds it was not of net benefit to Canada. BHP withdrew its bid shortly thereafter.
Saskatchewan has the world's largest deposits of potash, a valuable mineral mainly used in fertilizer.