Potash of Saskatchewan Management Discusses Q3 2012 Results - Earnings Call Transcript

 |  About: Potash Corporation of Saskatchewan Inc. (POT)
by: SA Transcripts


Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the PotashCorp Third Quarter Earnings Conference Call. [Operator Instructions] I would like to remind everyone this conference call is being recorded on Thursday, October 25, at 1:00 p.m. Eastern.

I will now turn the conference over to Denita Stann, Vice President, Investor Relations and Public Relations. Please go ahead.

Denita C. Stann

Thanks, Brock. Good morning, everyone. Thank you for joining us, and welcome to our third quarter earnings call. In the room with us today, we have Bill Doyle, our President and CEO; Wayne Brownlee, our Executive Vice President and Chief Financial Officer; David Delaney, Executive Vice President and Chief Operating Officer; Joe Podwika, Senior Vice President and General Counsel; Mike Hogan, Senior Vice President of PCS Potash; Brent Heimann, President of PCS Phosphate and PCS Nitrogen; and Stephen Dowdle, President of PCS Sales.

I'd like to welcome the media who are listening in and remind people that we are live on our website. I would also like to remind everyone that today's call may include forward-looking statements. These statements are given as of the date of the call and involve risks and uncertainties. A number of factors and assumptions were applied in the formulation of such statements, and actual results could differ.

For additional information with respect to forward-looking statements, factors and assumptions, we direct you to our news release and our most recent Form 10-K. Also, today's news release, which is posted on our website, includes a reconciliation of certain non-IFRS financial measures to their most directly comparable IFRS measures.

I'll now turn the call over to Bill Doyle for some comments, and then we'll go to questions.

William J. Doyle

All right. Thank you, Denita, and good afternoon, everyone. Thank you for joining us as we discuss PotashCorp's third quarter performance and our outlook for the period ahead.

The current market reflects a certain dichotomy in the global potash business. Our sales volumes in North American buyers set a third quarter record, as fertilizer distributors increased purchases and farmers focused on the fertility of their soils to capitalize on favorable crop economics. Strong Brazilian demand also was evident in our results, with shipments reflecting the expectation of record soybean and corn acres in that country. This strength was offset by delays in the settlement of new contracts with China and India, where a decline in volumes had an impact on our potash gross margin for the quarter. Our other nutrients also experienced a decline in gross margin compared to last year's third quarter, although our diversified product offering in phosphate and our ammonia business proved to be areas of strength for the company.

As a result, we delivered third quarter earnings of $0.74 per share, which trailed the $0.94 per share in the same period last year.

In view of current conditions, we recently revised our full year earnings guidance, primarily reflecting lower volume expectations for the potash market in the fourth quarter. While the mounting pressure on global grain supplies and the strength of crop economics are driving strong demand in market-oriented regions, they have not translated into full engagement from China and India as quickly as we previously estimated.

In North America, demand remains robust, with corn and soybean harvest advancing at a near-record pace and farmers moving to take advantage of the extended fall application window. As we speak with our customers, especially those in areas removed from severe drought conditions of this summer, we hear reports of some farmers cranking up the dial to ensure their soils contain the necessary nutrients before the upcoming planting season. Dealers are placing new orders to ensure they have the potash they need, though we continue to see a desire to build only enough inventory to meet near-term requirements. Still, we anticipate another strong quarter ahead and believe second half domestic deliveries are likely to establish a new record.

We are seeing a similar situation in Brazil, where corn and soybean planting is in full swing and farmers are drawing down fertilizer supplies, which have been delivered at a record pace over the past number of months. While competitive pressure has resulted in lower prices in this market, demand is expected to remain strong through the balance of this year. Farmers in Brazil are preparing for a big safrinha corn planting in early 2013, and distributors are trying to spread shipments over periods that historically have been less active, in an effort to reduce port congestion.

The question in the potash market, and in our outlook for the balance of the year, continues to be the timing of new supply contracts with China and India. China's potash consumption has been strong. It has been meeting its recent needs through domestic production, inventory withdrawals and rail deliveries, so reliance on these sources is expected to reduce China's seaborne requirements in the second half of 2012. It cannot solely rely on these sources on an ongoing basis, especially as it works to keep pace with its agronomic and food production needs. New contract negotiations have been constructive and ongoing and we anticipate shipments will resume prior to the end of this calendar year. Importantly, we believe the draw on China's inventories should lead to increased sales volumes for this market in 2013.

The situation in India is different, as there are a number of near-term challenges that make it difficult to determine how the balance of the year will play out. It is commonly accepted that food inflation remains a real issue in that country and that India's current fertility practices, if maintained, hold significant implications for lower long-term crop yields. We know that proper soil fertility can improve agricultural production. What we cannot predict is how or when India will address this issue.

India has a system of subsidies that distorts its domestic fertilizer market, putting a higher priority on nitrogen over the scientifically proven need for balanced crop nutrition. Some have suggested that the current contracts impasse is due to high global prices for potash, which have caused demand destruction, but the numbers simply don't bear that out. Since 2008, the price India pays for potash has declined 22%, while the average price it pays for urea is down 16%. And given India's misguided subsidy policies, its farmers have seen potash prices climb by more than 200%, while urea prices have remained flat.

For a farmer trying to put food on the table, making a short-term financial decision, even one that has negative long-term agronomic consequences, becomes easy. This has slowed the potash market in that country. But we knew that nutrient-deficient soils put yields at risk. Poor fertility practices and contract delays cannot go on indefinitely.

We are encouraged that the call for change in India is growing louder. India's private sector fertilizer industry is drawing more attention to the importance of taking steps to improve nutrient balances, because they know the nutritional requirements of over 200 million Indians is simply not being met. We believe this mounting pressure, coupled with the engagement of other key markets, including China, will provide an incentive for the Indian government to address its fertilizer policy and stimulate farmer engagement in 2013.

Other Asian countries continued to demonstrate strong demand and represented the largest percentage of sales volumes for Canpotex in the third quarter, although competitive pressures have led to lower prices. Strong economics for crops grown in this region are expected to support healthy demand for potash.

Total volumes to this market will fall short of the record levels in 2011, but we anticipate year-end inventories for 2012 will be well below levels at the close of last year. Based on these conditions, we have lowered our forecast for 2012 global potash shipments to approximately 50 million to 52 million tonnes and have reduced our own sales volume guidance for the full year to 7.6 million to 8.3 million tonnes. Given these expectations, we now forecast full year earnings of $2.40 to $2.60 per share, an estimate which includes a $0.39 per share impact of our second quarter Sinofert impairment charge.

We're well aware of the realities that are having an impact on our industry today, but we believe that our business operates on a long-term continuum. And we know that capturing the greatest value for our assets requires thinking beyond this quarter or this year. That means sometimes accepting greater short-term variability. This can be frustrating to investors, and we understand that. We are shareholders too. But as many of our long-term investors know, building a potash business can't be timed to swings in demand. This fact has been proven over many decades.

It will take a little time before we can fully turn loose our horses and demonstrate the full capabilities and value of our potash expansion program. That is a reality of our business when you consider the capital and the time commitments required to construct new capacity.

While we expect demand to rebound significantly in 2013 and our sales volumes to rise, we will face a temporary decline in our Canpotex allocation, as the tonnes we receive from Esterhazy revert to Mosaic. We anticipate this will impact first half offshore sales, but expect our allocation will increase as we prove out our new capacity, starting with Cory, which we are positioning ourselves to complete during the first half of 2013.

Our potash system has needed a strategically intended surge capacity, which represents tremendous opportunity as demand grows. The flip side of that is that it requires us to shut down capacity when the market slows so as not to destroy value. Like we did in the first quarter of 2012, we recently took steps to address the near-term supply imbalance by notifying our employees of the inventory-related downtime at our Lanigan and Rocanville facilities during the fourth quarter and early first quarter of 2013.

As we refine our estimates for next year, we anticipate our operational capability will be approximately 12.5 million tonnes, and given our strategy of matching supply to demand, that will likely require us to make additional curtailment decisions even in a robust marketplace. While we remain committed to a patient approach in growing our sales volumes in a responsible manner, that doesn't mean the opportunity for shareholders is like some carrot on a stick that is just out of reach.

We believe we are in an enviable position today and for years to come. As other companies evaluate or begin to plan for new capacity, our growth story is nearly paid in full. We are almost 80% complete on our potash capital commitments. With our annual capital expenditures forecasted to decline in 2013, we expect to have a greater ability to generate free cash flow.

And on the potential we see in potash, we will also have more nitrogen capacity. It should be evident in our nitrogen gross margin in the first quarter of 2013. We are taking steps to reward our long-term shareholders, including the most recent increase in our dividend, announced in September. That was our third adjustment since the beginning of 2011, bringing the cumulative dividend increase to more than 500%.

We continue to explore ways to maximize and return value to our shareholders, through dividends, opportunities in our potash business and share repurchases. We will do this, as we have in the past, with a focus on the long term and understanding of the needs of all of our stakeholders. By building a company that serves our investors, customers, communities and employees, we can increase our value to all the people we serve.

I'm joined today by our management team, and we would be happy to answer your questions.

Question-and-Answer Session


[Operator Instructions] The first question today comes from Joel Jackson of BMO Capital Markets.

Joel Jackson - BMO Capital Markets Canada

Bill, many investors are concerned that several potash producers are becoming less disciplined. Was wondering what your thoughts of this are right now. And what is the risk of this, in your mind, going forward as we see the industry significantly increase brownfield capacity over the next couple of years?

William J. Doyle

Well, Joel, what I'd say to you is that, in softer markets when volumes are down, you will get people that get a little bit nervous, and it's just a function of people scrambling for business. And as the business gets more robust and volumes return, they seem to calm down. So we've been doing this for a little while and I can tell you that it inevitably occurs during these times. I just think it's a function of the marketplace, with the overall pressure on volumes in 2012.


Next question comes from Edlain Rodriguez of Lazard Capital Markets.

Edlain S. Rodriguez - Lazard Capital Markets LLC, Research Division

Bill, a quick question. I mean, one of your fellow Canpotex members recently intimidated -- intimated that prices might have to go down in China in order for a contract to get done. Where do you stand on that? And what -- I mean, what's your view on that?

William J. Doyle

Well, we have actually, negotiations going on right this week with the Chinese and Canpotex folks too. And we just don't comment on prices -- what prices might do during negotiations. We just don't think that's helpful.


Next question comes from Mark Connelly of CLSA.

Mark W. Connelly - Credit Agricole Securities (USA) Inc., Research Division

Bill, as we think about your larger system and the downtime you're going to take, should we expect you to take downtime differently in a way that's going to affect the variability of your cost to a greater or lesser extent? Obviously, you take Lanigan down a lot, and that has a big effect because it's a low-cost facility. But as your system gets bigger, is your approach to downtime going to change?

William J. Doyle

Mark, what I'd say is the downtime now takes into consideration the expansions and then a need to prove out some of the expansions. So you have some short-term variability. Over the long term, obviously, I'd say that it would behoove us to operate our lowest-cost facilities. And you're right with Lanigan, it's one of our lowest-cost facilities. So there's a short-term anomaly here as we bring on these expansions and prove out the expansions under the Canpotex formula. But over the long term, I think we'll do what obviously is in the best interest of our cost profile. The other thing that I'd say, Mark, is that we are reverting the Esterhazy tonnes to Mosaic at the end of this year. Those tonnes have proved, especially this year, to be expensive tonnes for us, so our cost profile should improve as we eliminate those high-cost tonnes from our mix.


Next question comes from David Begleiter of Deutsche Bank.

David L. Begleiter - Deutsche Bank AG, Research Division

Bill, Prospect Global announced a deal this week with the Chinese. Is there a growing ability by these smaller players to create mines quicker and get -- gain share from larger players? Is there a concern, in your view?

William J. Doyle

I saw that, David, and it's just another promoter. No. The answer to your question is no. They can't do it any quicker than anybody else. They can talk about it faster than other people. But we know that deposit and it's very low ore grade. It has a lot of challenges. It's going to be expensive to build out. And the comment that they had signed this 0.5 million tonne contract with the Chinese, believe me, there are all sorts of outs for the Chinese in that contract. I understand if they don't produce significant quantities by 2015, that the Chinese can get out of the contract altogether. So this is just another promoter. And we could look at the economics of the business today, there's no return on that investment. So we don't pay much attention to it.


Your next question comes from P.J. Juvekar of Citi.

P.J. Juvekar - Citigroup Inc, Research Division

Bill, you talked about the summer refill programs and dealers getting ready for the fall, but what we've been hearing was that dealer inventories are still quite low. So can you shed some light on this refill program and talk about each nutrient, like NPK?

William J. Doyle

All right, P.J., I'll have Stephen Dowdle comment. He'll talk about potash first and then talk a little bit about nitrogen and phosphate.

Stephen Francis Dowdle

Yes P.J., in the third quarter, quite robust demand for -- in our dealer system, and basically this was the result of a couple of things. One, when we ended the previous fertilizer year on June 30, inventories were very, very depleted. And as we began the new fertilizer year, very positive crop -- the prospects, very positive crop economics. And we saw from during the quarter very strong desire to position tonnes for fall application and to start rebuilding the supply pipeline. And in our results, we sold 950,000 tonnes in the third quarter, which was an all-time record for us. And the mood in the market right now and particularly since we've had some timely rains here over the past 4 weeks, the mood is quite positive with this moisture. And the prospects with an early harvest, that we will have an open and extended fall application period, is for very good fall application. The demand is certainly there. And as we end the year, the demand here in the fourth quarter will depend in part upon the weather and how open the season is when snowfall comes. But all indications that we're hearing is very positive demand. This is translating as well into the phosphate and nitrogen markets. With the early harvest, there's been an early -- an earlier-than-usual demand for phosphates. There's logistical challenges on the river with low water levels, which gets people concerned. But the demand is there and producers are struggling to keep up with the demand right now. Nitrogen markets have been unusually stable, trading in a relatively narrow range, and this is again a reflection on good demand in the Midwest for nitrogen.

William J. Doyle

P.J., I might just add, there was a lot of talk and some things written about P&K applications being severely down because of the drought this year and that just hasn't been true. And if you look at the biology of crops and when they have uptake of P&K, if you have a, any type of agronomic background here, you knew that, that just wasn't factual. So we're seeing that proved out here with the current demand.


The next question comes from Vincent Andrews of Morgan Stanley.

Ted Drangula - Morgan Stanley, Research Division

This is Ted Drangula sitting in for Vincent. I guess, one question on your global shipment outlook for 2012 and '13. Obviously, you took down the range for this year, in the 50 million to 52 million tonnes. And then I guess, previously, you had said 56 million to 60 million tonnes for next year. Does the -- do you guys still think that the total demand for 2012 and '13 combined is the same? Or is some of this a demand destruction or longer-term deferral issue, meaning that what we're losing here in '12 doesn't go into '13? Because those would be some pretty significant numbers for 2013 demand.

William J. Doyle

Now I -- I think, Ted, that first of all, I think I addressed the demand destruction comments. That's just not true. The prices are more affordable for potash today for people growing crops around the world than they've been in a very long time, so it isn't a question of demand destruction. We have had deferrals and we have had, obviously, the impact of some of the macro issues that are out there. I think the China and India delays are just going to put more pressure into the first quarter or first half of 2013. We think it's going to be a robust recovery year. We have said 56 million to 60 million tonnes, we don't really come up with a final number here until early in the new year. But it's going to be a significant recovery year and that's just to be able to respond to these fundamentals of agriculture.


Next question comes from Jeff Zekauskas of JPMorgan.

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

Historically, Canpotex and PotashCorp has restrained production in the interest of global potash pricing. As you build up towards 17 million tonnes, if it turns out that your tonnage, because of slow growth in the market, remains, I don't know, below 10 million tonnes, do you have to depreciate all of that additional capacity whether you use it or not? And is potash comfortable having such a large amount of unused capacity relative to what it used to have in the old days, when years have soft demand?

William J. Doyle

Jeff, I'm going to tag-team you with that answer. I'll answer the first part and then get Wayne to comment on the depreciation. But first of all, I should just say to you that Canpotex has nothing to do with production decisions whatsoever. So to say Canpotex participates in restrained production, that's just crazy, because we each make our decisions on our own at Canpotex as member companies. There's a debate as to how much capacity, overhang of capacity, that we'll have. And what I would say to you is that I think, in the medium term, that you -- we're going to be using much more of our capacity than a lot of people think. And if we get any type of recovery in the global economy, you're going to see the potash market really be very, very robust. So I don't think that we're going to have all this tremendous overcapacity that some are reporting in their particular writeups. Wayne, do you want to comment on depreciation?

Wayne R. Brownlee

Yes. It's very simple. We depreciate our potash capital on a unit of production basis so it will basically be attached to the production levels that we have in a particular year. So we won't have to be eating that, Jeff, if we ever got to that unlikely scenario.


Next question comes from Ben Isaacson of Scotiabank.

Ben Isaacson - Scotiabank Global Banking and Markets, Research Division

Bill, just maybe a quick question on your previous response. You talked about a global recovery in emerging markets. I'm just kind of trying to figure out what that means when we are already in an environment of record or close-to-record grain prices. And what would we have to see with respect to farmer economics for demand to really come back next year?

William J. Doyle

All right, Ben, it's really -- we talked about India and China, markets that have a lot of government involvement in them. There are some -- when you have a lot of government involvement, you can do things that don't reflect the market and you can make decisions that, okay, we're going to delay potash importations, even though we know it's agronomically shortsighted. Penny-wise policy maybe, but certainly pound-foolish, especially when you have the number of undernourished people that exist. And by the way, India has the largest number of undernourished people in the world. And so you're seeing a lot of pressure from the private sector. Our customers, they're very concerned about this and rightly so. And so you will see a rebound in these government -- where you have government involvement in these -- in some of these large markets, that are going to respond. And so when we look at return of India, for example, for next year, we have India, in our 2013 profile at 5 million tonnes. Well, India was, in 2010 was over 6 million tonnes. In 2009, they were over 6 million tonnes. The last 2 years, they've been down. 2011, they were 4.2 million tonnes. In 2012, our forecast, they're going to be about 3 million tonnes this year. So significantly down, and they were already behind the 8 ball in terms of their nitrogen-to-potash ratio, tremendous imbalance in fertilizer. It affects grain production. It affects food production. And when you have a really difficult situation, a crying need, certainly in the case of India, for better food production to address these nutritional challenges that they have, you just can't go on and keep pursuing that, penny-wise, pound-foolish policies. So it's going to rebound and we think that it's just a matter of time.


Next question comes from Don Carson of Susquehanna Financial.

Donald Carson - Susquehanna Financial Group, LLLP, Research Division

Bill, I wanted to go back to the Esterhazy reversion, and 2 questions there. One, on your Canpotex allocation, do you get the full benefit of proving out your expansions? Because it's my understanding that some of your Canpotex ratings are above your effective capacity. And two, what's the trade-off between the lower cost you'll have next year by not having Esterhazy and the higher depreciation charge from your expansions?

William J. Doyle

All right. I'm going to tag-team you again with that -- with that answer. First of all, if you take Cory as an example, which will be the first mine that we will prove out, we're going to get the full benefit of the Cory expansion. So everything over and above what we had in our original entitlement, we will get that full benefit. Same thing is true of Allan, same thing is true of Rocanville. So that's just the way the system works, Don. And as you know, the Canpotex process, if you prove out your capacity before midyear, before June 30, you get the benefit of that capacity in the second half of the year. So if you can't get it done until the second half of the year, it doesn't take effect until January 1 the following year. But basically, it's a 6-month process that you benefit from if you are able to prove out your capacity during the first half year. Wayne, do you want to comment on the second part of the question?

Wayne R. Brownlee

Don, we'll give you better information in January when we put out our guidance for 2013, but right now I would expect our cost per tonne in potash would come down with -- we're probably going to have a bias towards putting Allan and Cory at a higher rate and not having the Esterhazy tonnes, and the drop in the Esterhazy tonnes is going to more than offset any weighted average change across our mines. And right now, I would expect our cost per tonne to come down.


Next question comes from Jacob Bout of CIBC.

Jacob Bout - CIBC World Markets Inc., Research Division

Yes, excuse me, just a little bit more on the cost side and managing the costs associated with that excess capacity. So if you're still in the position of 4 million to 5 million tonnes of excess capacity, should we be thinking about the kind of the 150 to 160 per tonne? And does it make sense, instead of doing a rotating shutdown in periods of lower demand, to shut down, say, just one mine instead?

William J. Doyle

Well, there's operational issues, Jacob. First of all, to say we're going to have 4 million to 5 million tonnes of overhang, overcapacity is -- that -- those are your words, not mine. I don't believe that, so -- and as this market recovers, we won't see anything like that. So there are operational issues. And when you close a mine at the depths that we operate, you have some issues keeping your operating panels open and your entryways open. There's things that you have to take into consideration. There's a lot of pressure at 1,000 meters deep, and so you have to watch that. I think, as I said earlier, that you'll see us, and Wayne just commented, have a bias towards Cory and Allan production in the short term as we prove out these expansions. But over the long term, I think you'll see us take a more historical approach to shutdowns, where we would tend to operate our lowest-cost mines in periods where we have shutdowns.


Next question comes from Kevin McCarthy of Bank of America.

Kevin W. McCarthy - BofA Merrill Lynch, Research Division

Bill, with regard to China, I think you mentioned in your prepared remarks 3 issues that appear to be influencing demand there, namely rising domestic production, inventory de-stocking and higher rail deliveries. I appreciate you're in negotiations right now, but to the extent you can, I was wondering if you might be able to amplify a bit on each of those 3 to help us better understand maybe the relative importance of the 3 issues and how much they might have varied versus your prior expectations.

William J. Doyle

What I'd say is, in terms of their domestic production, of course, Qinghai Salt Lake is the biggest producer in China, and they are shutting down now for the winter season. They don't produce because their brine lake freezes up and their equipment is very hard to operate during the winter months. So they'll have some inventory there. I might have Stephen just comment, he follows these inventory positions fairly closely. But we know that they have been using that domestic production. They have been de-stocking. He can comment on overall inventories, as I said. And we know that the Russians have been railing potash into China. That works during periods where you don't have really robust demand. For spring season, it doesn't work. They definitely need seaborne imports. And certainly, as they grow and the market takes off again, they will need much more reliance on seaborne. Stephen, do you want to comment on the stocks, their inventory levels?

Stephen Francis Dowdle

Sure. Kevin, in China right now, and this is -- China is not really much different than what we've seen in every large market around the world. What we're seeing there, as we come to the close of 2012, we've seen lower inventories, in all these major markets, compared to where they were at the end of 2011. In China right now, our estimate of inventories is approximately 2.8 million tonnes, but there have been about 1.3 million tonnes at the seaports, with Qinghai Salt Lake having about 1 million tonnes and then about 500,000 tonnes at inland warehouses [indiscernible] distribution. We expect there, during the fourth quarter, to be some drawdown on these inventories. And we expect that -- as we enter January 1, 2013, that the situation will be pretty normal in terms of inventory levels in China. We also see, right now in 2012, January to September, imports are up about 17%. And we've seen a trend here in the last couple of years of consumption in China to continue to grow. And our view of that as we look back on 2012, that we're going to see that consumption grew in 2012, and I think we're on a positive trend line. And we expect to see that positive growth trend to continue in 2013.


Next question is from Michael Picken of Cleveland Research.

Michael Picken - Cleveland Research Company

I just wanted to dig a little bit deeper on the cost side on the phosphate side and in particular, with some of the costs associated with moving to a new site in Aurora, how we should think about modeling your phosphate costs kind of going forward.

William J. Doyle

All right. I'm going to ask David Delaney to comment on that, Michael.

David Delaney

Yes. Good afternoon, Michael. The third quarter costs were up primarily. We were still feeling the effect of Tropical Storm Debby in White Springs. We were down about 2 extra weeks there. That's an associated cost with that downtime. We had a 35-day turnaround in Geismar. And then in the third quarter, we entered some difficult mining conditions in a new area, primarily with some water issues and the depth of the ore. We feel like we're working through those issues and hope to improve here later in the fourth quarter and into the new year.


Next question comes from Paul D'Amico of TD Securities.

Paul D'Amico - TD Securities Equity Research

Just wanted to get back to China for a brief second here. Bill, in the opening remarks, you were mentioning that you expect China -- there's a lot of confidence with respect to China contract relative to India, especially, and you expected volume to be better next year. I just wanted to know the reference point. I mean, we only have 700,000 tonnes for the first half of this year. Typical Canpotex is about 1.1 million to 1.5 million. So when you're making that, the context is relative to a typical year, like you're analyzing the 700,000 to 1.4 million, that kind of thing?

William J. Doyle

It could be some growth also, Paul. We expect China to be a little bit stronger next year overall. Yes, I would say you return to more normal. So if you look at Canpotex in general, about 30% of the marketplace is Canpotex and we see returning to that more normal trend line next year. So if you add a little growth to that, it could be even a little bit better, but we'll see. We do feel more confident about the Chinese. Our conversations with the Chinese are very business oriented. And they know they need the material and they're right. I think we're having very constructive discussions from the reports that I'm getting this week, and they're continuing. So we'll see where that ends up, but we're expecting something before the end of the year in China.


Next question comes from Tim Tiberio of Miller Tabak.

Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division

In your press release, you highlight that you have roughly $10 per share in equity investments. I'm not implying that the worst-case scenario might happen again next year, but just theoretically speaking, if we run into an issue with India again, and it doesn't seem like some of these equity investments are actually giving you a lot of control over the overall supply-demand environment, would you consider divesting some of these equity investments and doing a special dividend?

William J. Doyle

Well, when you say we don't have much control over the equity investments, it depends on which one you're talking about. When you're a shareholder at the table, say, of SQM, you own almost 1/3 of the company. Does that give you some say of the equity investment? I think so. So do your Board of Directors and having a seat at the table, so I think there's some there. In terms of Jordan, we have operating and marketing control of Jordan, with 28% of capacity, so I believe that gives us some degree of say in how APC operates. So I think that -- as I said many times, that those investments are the second-best potash assets in the world after our own, but we don't own them to be investors. We own them for -- with a long-term goal of having a majority position in each one. I've said many times, this doesn't happen overnight. But we think that they're a very, very valuable part of our company and it's more than just the monetary value.


The final question today comes from Matthew Korn of Barclays.

Matthew Korn - Barclays Capital, Research Division

Just a question on Trinidad. Just wanted to know, were the interruptions over this past quarter anything different than normal curtailments that we've seen kind of ongoing for the last couple of years? And with that perspective, is -- are those curtailments something we should consider to be like a permanent situation? Is it lagging infrastructure, or is there less available gas or what's marketed? What's happening now?

William J. Doyle

All right, Matthew. I will ask -- by the way, we love your last name, Matthew. I'm going to ask Brent Heimann, who looks after our nitrogen and phosphate operations, to comment on Trinidad. Brent?

Brent E. Heimann

All right. Good afternoon, Matthew. In Q3, we were impacted by about 40,000 tonnes of ammonia in Trinidad and 100,000 tonnes year-to-date. And I feel that, for the full year, we could approach 150,000 tonnes, which is a bit more than we had in 2011. I expect a similar number for next year. What's happening is there's a lot of offshore maintenance on all the platforms and infrastructure, a real heavy reliability program by the gas producers. And we expect that to tail off at the end of next year and then return to normal levels in 2014.

Denita C. Stann

Thank you, everyone. We appreciate your time today. And if you have any further questions, please don't hesitate to give us a call at the office. Have a great day.


Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.

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