Mosaic Ordered to Continue Delivery in Potash Suit

A Canadian court has ordered The Mosaic Company to continue supplying potash to Potash Corporation of Saskatchewan until the two companies go to trial next January over a contract dispute.

Plymouth-based The Mosaic Company recently announced that is has been ordered to continue supplying potash to Potash Corporation of Saskatchewan (PCS) until January 2012-when the two companies are scheduled to go to trial over a contract dispute.

According to Mosaic, it has been providing potash to PCS from its mine in Esterhazy, Saskatchewan, for more 40 years under a “tolling” agreement.

In May 2009, Mosaic informed PCS that it was close to satisfying its obligations to provide the company with potash-a powdery salt that contains potassium and is primarily used in fertilizers-at cost under the agreement.

PCS filed a suit against Mosaic in the Saskatchewan Court of Queen's Bench shortly after it was notified that the contract was almost fulfilled based on Mosaic's calculations. It amended its complaint in January 2010, saying it is entitled to receive potash from Mosaic's mine until at least 2012 under the contract, according to the company's 2010 annual report.

But Mosaic contends that the contract was fulfilled as of May 2011. According to its annual report, Mosaic filed a countersuit 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.

Mosaic also said in a press release that PCS has requested and received substantially more potash than has been mined from PCS' reserves and that Mosaic has supplied the excess from its own reserves.

A trial is scheduled to start in January 2012 to determine Mosaic's future obligations in supplying potash to PCS under the contract. The recent order from the Canadian court requires Mosaic to continue supplying potash to PCS at cost until the trial begins.

A company spokesman told Twin Cities Business that the continuation of the contract with PCS would not hinder the company's finances nor prevent it from entering into other potash distribution agreements, but he would not provide further details as to why the company was fighting to end the contract with PCS.

Mosaic is among Minnesota's 15-largest public companies based on its 2010 fiscal-year revenue of $6.8 billion.