Q: Why the drop of late? What effect will BhP and their new Jansen potash mine have on NTR valuation? What is your outlook for NTR?
5i Research Answer:
NTRs business is tied to the price of potash, which have been moderating since the summer. This is effectively what we can see in the price graph for NTR. Its Trinidad nitrogen operations are also being shut down due to port access restrictions and a lack of reliable natural gas supply. The Jansen project by BHP has implications because it could affect the global potash supply. Jansen is a large potash mine in Saskatchewan, which if it comes online it could add supply to the broader potash market, pressuring prices. Much will depend on its upcoming earnings release, but operationally it is doing OK, and it is not priced for perfection at 11X forward earnings. We think things can slowly improve here if the price of potash rises again.