The Mosaic Company on Thursday announced that it has settled a contract dispute involving its potash mine in Saskatchewan-and a trial that was scheduled to begin next month has been canceled.
Plymouth-based Mosaic has been providing potash-a powdery salt that contains potassium and is primarily used in fertilizers-to Potash Corporation of Saskatchewan (PCS) under a "tolling" agreement that began more than three decades ago.
In May 2009, Mosaic informed PCS that it was close to satisfying its obligations to provide the company with potash at cost under the agreement.
PCS then sued Mosaic and claimed that it is entitled to receive potash from Mosaic's mine until at least 2012 under the contract. Mosaic had argued that the contract was fulfilled as of May 2011.
Mosaic countersued, alleging that PCS breached the contract by refusing to take delivery of potash that it ordered. PCS allegedly did not accept the delivery due to the global financial and credit crisis.
A Canadian court in July ordered Mosaic to continue supplying potash to PCS until the previously scheduled January trial.
In its Thursday news release, Mosaic said that the two sides have reached a settlement, the trial has been canceled,and both PCS' original lawsuit and Mosaic's counterclaim have been dismissed.
Under the terms of the deal, Mosaic's obligation to supply up to about 1.1 million metric tons of potash annually under the tolling contract will expire on December 31, 2012, at which time the contract will be terminated.
Mosaic also said that, following the termination of the contract, it will receive credit for additional capacity at its Saskatchewan mine that is currently allocated to PCS, allowing it to expand its inventory.
"We are pleased to reach agreement with PCS on termination of toll production for PCS at our Esterhazy mine, the world's largest potash mine," Jim Prokopanko, Mosaic's president and CEO, said in a statement. "This settlement provides certainty to our investors around the timing of this agreement and allows our customers access to this additional inventory."
Mosaic is among Minnesota's 15-largest public companies based on revenue, which totaled $9.94 billion for the fiscal year that ended May 31.