Potash Corp's long-serving CEO, Bill Doyle, passes the torch to
successor Jochen Tilk in July, but the charismatic Doyle will
stay on as senior adviser for a year.
Doyle is likely the most recognizable figure in global trade in
potash, a key nutrient for improving crop yields. His extended
presence signals there will be no imminent change in Potash
Corp's practice of scaling back output when demand slips, as the
company did in December when it cut 18 percent of its workforce.
Because Potash Corp owns the most potash-producing capacity in
the world, a change in that philosophy would cause the crop
nutrient's value to plunge.
That's what happened last summer after Potash's chief rival,
Russia's Uralkali OAO <URKA.MM>, quit the Belarusian Potash Co
(BPC) trading partnership and said it would maximize sales
A volume-driven battle for market share "is not going to
happen," said Barry Schwartz, chief investment officer at
investment management firm Baskin Financial.
Even so, Baskin just recently sold its stake in Potash Corp on
concern that BPC's breakup has diminished the pricing power of
potash miners. Potash Corp, Mosaic Co <MOS.N> and Agrium Inc <AGU.TO>
<AGU.N> jointly own Canpotex Ltd, a company that collectively
markets their potash production outside North America.
Global demand for potash is expected to rise in 2014, but key
importers in China and India have for the past couple of years
demonstrated an ability to drive deeper discounts on contracted
volumes due to plentiful supplies.
Tilk is the former chief executive of Inmet Mining, a copper,
zinc and gold producer that First Quantum Minerals <FM.TO>
acquired last year. In a brief statement on Sunday he said he
shares Doyle's philosophy of running the company. He was not
available for an interview on Monday.
Tilk, 50, studied mining at Germany's RWTH Aachen University in
the 1980s before joining Inmet, according to his LinkedIn page.
A Canadian citizen, he will live in Saskatoon, Saskatchewan,
where Potash Corp is based, company spokesman Bill Johnson said.
If Potash Corp intended to fight for volume over price, it
likely would not have chosen an operations-focused leader over a
smooth salesman like Doyle, Spencer Churchill, analyst at
Paradigm Capital, said in an interview.
"This guy is more of an efficiency guy, grinding out profits,"
In January, Potash Corp forecast a profit of $1.40 to $1.80 a
share for 2014, lower than last year, when it earned $2.04 a
share. The company's shares are down about 9 percent from a year
ago, although they have rebounded more than 5 percent in 2014.
The shares dropped more than 2 percent in New York and Toronto
on Monday afternoon, falling slightly faster than those of its
North American peers.
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Unlike Potash Corp, Inmet was a producer whose rate of production
and sales did not significantly affect market prices.
Consequently, Tilk's history at Inmet does not reveal his views
on supply management, said Raymond Goldie, analyst at Salman
To be sure, forces outside Potash Corp's boardroom could prompt
Tilk to play a different hand than expected. Uralkali continues
to operate outside of BPC, leaving supplies less tightly managed
than they have been in recent years.
BHP Billiton PLC <BLT.L> <BHP.AX> and K+S AG <SDFGn.DE>,
meanwhile, are building mines in Potash Corp's Saskatchewan
backyard that could erode Canpotex's market clout. BHP has not
yet given the full go-ahead to its potash project.
Doyle, who turns 64 next month, was expected to retire soon, but
bypassing internal candidates for someone with no background in
fertilizers might surprise some investors, Scotiabank analyst
Ben Isaacson said in a note to clients.
Doyle may be most remembered for fending off a hostile takeover by
BHP Billiton in 2010. The Canadian government's rejection of
BHP's move is likely to deter any potential suitors from
approaching Potash Corp in the foreseeable future.
Tilk is just the latest new face atop the world's biggest
fertilizer producers. Earlier this year, new CEOs took the helms
of Agrium Inc <AGU.TO><AGU.N> and CF Industries <CF.N>,
replacing chief executives who were, like Doyle, approaching
normal retirement age.
Uralkali also replaced its CEO in a shakeup after the collapse
The appointment of Tilk followed a three-year search. The
company's board decided to start the transition now because an
"exceptional candidate" was available, Potash Corp's Johnson
Doyle, who served as CEO for 15 years, led Potash Corp through
an $8-billion, 11-year expansion of its Canadian potash mines
that is nearly complete, freeing up cash for other uses. With
Uralkali, Mosaic and Agrium also expanding, however, global
capacity exceeds current demand, and another round of
cost-cutting by Potash is likely, BGC analyst Mark Gulley said.
Tilk has valuable experience from building Inmet, but Potash
Corp is "a mature company" that doesn't need more mines, said
Schwartz of Baskin, which is also a former shareholder of Inmet.
"It's going to be a tough job," Schwartz said. "This guy is
going to be criticized if he doesn't do something, criticized if
he does. So, good luck."
(Reporting by Rod Nickel in Winnipeg, Manitoba; editing by Peter
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