Now the trick will be keeping prices from appreciating too much to ensure a major would-be competitor, BHP Billiton, stays on the sidelines.

BHP has been weighing an entry into potash since prices spiked a decade ago. Construction of its Jansen mine in Saskatchewan — which could become the world’s largest — has been advancing slowly for years, but BHP has held off on committing the capital needed for completion, because of soft prices.

A BHP entry would create stiff competition in Canada, where a marketing arrangement allows Nutrien and Mosaic Co. to dominate.

Fresh supply would also threaten a recovery for potash driven by steadily growing global demand, Nutrien’s curtailments and a slow ramp-up at new mines owned by K+S AG and EuroChem.

Nutrien plans to wield its 8.1 million tonnes of unused capacity to protect its position, in a switch from its previous strategy of using curtailments to lift prices even at the cost of market share.

CEO Chuck Magro, asked whether Nutrien intends to balance its desire for higher prices with an effort to keep competitors out, said “that’s exactly the way we think about it.”

Nutrien’s idled production represents 11 per cent of current global operational capacity and will be deployed once prices approach levels that would encourage new mines, he said.

“There will be a price in the global market, that once we get there, you will see Nutrien put more tonnes into the market because the demand is there. We will not be shy,” Magro told Reuters.

Prices are well below such a level, he said, declining to identify it.

Granular potash sells for an average $331 per tonne in Brazil, as of Aug. 17, up 25 per cent year over year, according to Mosaic data (all figures US$).

BHP likely needs prices in Brazil of around $400 per tonne to realize a reasonable return on the Jansen mine, said Bernstein analyst Jonas Oxgaard. Nutrien will need to keep prices below that level to avoid “waving a red flag in front of the BHP bull,” he said.

BHP reports annual results on Tuesday, and investors will look for any improved sentiment toward potash, given rising prices.

A spokeswoman said BHP takes a long-term view of commodities and investment decisions are not based on short-term prices.

BHP has approved $3.9 billion in spending on the Jansen mine, allowing it to sink mine shafts. That work may last up to two years, and building the first four million-tonne stage of the mine is expected to require a further $4.7 billion that BHP’s board may consider next year.

Three more stages of equal size are longer-term options, taking the mine to 16 million tonnes, or more than double the world’s current largest potash mine.

Nutrien maximizes its leverage through Canpotex, a company it owns with Mosaic that handles transportation and sales outside North America.

Canpotex’s ownership of thousands of rail cars and access to four port terminals give it a logistical advantage, raising the challenge for K+S, the only other Canadian potash miner, to compete.

But BHP, one of the biggest global sellers of iron ore, copper and coal, has a global supply chain, low-cost production and a reputation for focusing on market share over price, positioning it to mount the fiercest competition Canpotex has ever seen in its own backyard.

“It’s already a highly competitive space,” said Canpotex CEO Ken Seitz. “The fact that (BHP) would be coming out of Saskatchewan, I don’t see that as threatening Canpotex.”

Canpotex expects to set a sales record this year of around 13 million tonnes, and has sold out of supplies through October.

Demand from Brazil and China continues to grow, pushing global sales to an expected 66 million-67 million tonnes this year, Seitz said.

— Reporting for Reuters by Rod Nickel in Winnipeg and Barbara Lewis in London.

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Glencore said this week it had made an informal approach to discuss “a possible consensual business combination,” but offered few details about what that would involve. Bunge said it was not in talks with Glencore.

Glencore CEO Ivan Glasenberg said his company wanted to expand its agriculture business via Glencore Agriculture, which is a partnership between the London-listed mining company and two Canadian funds.

“Should the transaction happen, we think the most likely combination would be between Glencore Agriculture Limited and Bunge, with Glencore maintaining a sizeable stake of up to 50 per cent in the combined entity,” Elena Nadtotchi, vice-president and lead analyst for Glencore at Moody’s, said in a statement.

“We estimate this could require a cash contribution of up to $6 billion from Glencore, assuming current valuations,” she said, adding Glencore would still remain within Moody’s guidance for the agency’s investment grade Baa2 rating.

A combination involving Glencore Agriculture would be positive for Glencore’s business profile, Nadtotchi said.

But she said an outright acquisition of Bunge by Glencore or a deal that would significantly dilute Glencore’s stake in the combined group was unlikely.

“A scenario where a combination happens at the level of (Glencore Agriculture) and Glencore maintains a substantial stake of up to 50 per cent in the enlarged group is more in line with Glencore’s strategy and previous deals,” she said.

— Barbara Lewis is Reuters’ senior EU energy and environment correspondent, based in London.

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CEO Ivan Glasenberg was speaking a day after U.S. grains trader Bunge said it was not in talks with Glencore, while Glencore said it had made an informal approach to discuss “a possible consensual business combination.”

“Agriculture has always been our strategy,” Glasenberg told shareholders at the annual general meeting in Cham, near Zug in Switzerland where Glencore has its headquarters.

Glencore, which became a major international grain trader through its takeover of Canadian-based Viterra in 2012, sold 50 per cent of its agriculture business in 2016 to two Canadian investment funds, the Canada Pension Plan Investment Board (CPPIB) and British Columbia Investment Management Corp (bcIMC).

The disposal took place when Glencore was rebuilding its balance sheet following the commodity price crash of 2015. Ratings agencies have since upgraded Glencore and analysts say its balance sheet is now strong.

Glasenberg said he hoped to grow the agriculture business through its vehicle Glencore Agriculture, set up with the two Canadian funds.

“That structure will be used to continue growing our agriculture business,” he said. “Hopefully it will get bigger in the future.”

In general, Glasenberg said he preferred to increase the business through acquisitions rather than greenfield investment, which in the mining sector can be very costly.

He also said the company had no interest in getting into commodities that it does not already trade.

Glencore has said the talks with Bunge may not lead to any deal, but has not said what it might acquire should it not buy Bunge.

Speculation has mounted that, after a string of poor results, the world’s big grain trading houses are poised for a wave of consolidation similar to the mergers and acquisitions seen in the farm chemicals and seed industries.

Apart from Bunge, the big four trading houses include rivals Archer Daniels Midland, Cargill and Louis Dreyfus.

They have struggled against global oversupply and thin trading margins, but Glencore sees agriculture as part of the late-cycle commodities, for which it predicts demand will strengthen as economies such as China mature.

— Barbara Lewis is Reuters’ senior energy and environment correspondent for the EU, based in London. Additional reporting by Justin George Varghese in Bangalore.

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Analysts said the results beat expectations, driving the share price nearly two per cent higher, building on gains of nearly 20 per cent this year, while the wider sector fell by nearly two per cent.

Companies across the mining industry, which was pounded by the commodities market rout of 2015, have exceeded expectations after a recovery in the price of raw materials such as iron ore and coal last year.

Glencore’s 2016 earnings before interest, tax, depreciation and amortization (EBITDA) were up 18 percent year on year at $10.3 billion (all figures US$).

Its trading arm achieved adjusted earnings before interest and tax (EBIT) of $2.8 billion, up 14 per cent and above previous guidance of $2.5 billion to $2.7 billion.

The division is expected to deliver profit between $2.2 billion and $2.5 billion this year, the company said, adding that the lower range reflects the sale of 50 per cent of Glencore Agriculture in December.

Like other miners, Glencore embarked on asset sales to drive down debt and has said it will maintain a lower net debt to EBITDA ratio, a crucial measure of available cash in capital-intensive mining.

CEO Ivan Glasenberg said the ratio could drop below 1:1 this year if no further acquisitions are made, compared with its goal of 2:1 and the 3:1 ratio it favoured previously.

By the end of 2016, net debt had fallen to $15.5 billion, down $14.1 billion from 18 months ago.

Investor cheer

“Since our IPO in 2011 and subsequent acquisition and integration of Xstrata, Glencore has never been so well positioned as it is today,” Glasenberg said.

The results, which analysts said were above consensus, offered some welcome cheer for Glencore investors.

“It’s another stellar quarter that shows how they’re rebounding from the depths of the crisis. The market likes the story,” said David Neuhauser, managing director at U.S. hedge fund Livermore Partners, which owns Glencore shares.

Glasenberg told reporters that shareholders might also benefit from rising dividends and that surplus cash could be used for small deals or “bolt-ons” on the edge of existing assets rather than huge acquisitions.

“We could do many things. We could give our long-suffering shareholders a generous gift of a special dividend,” he said. “To ourselves as shareholders, that would not be a bad thing to do.”

Having promised late last year that payouts would be reinstated, Glencore said on Thursday that its board had recommended a dividend of seven cents per share.

On the negative side, the decision to hedge 55 million tonnes of coal in a rising market led to what Glencore labelled an “opportunity cost” of $980 million, though Glasenberg said the company would continue hedging as appropriate and was locking in coal prices with Japan over a year-long contract.

He remained bullish on commodity prices, predicting good demand from China — buyer of about half of the world’s raw materials — and said that new supply would be offset by lower production from ageing assets as miners invest conservatively.

“What started the negative vibe was increased supply,” he said. “The industry has changed.”

— Reporting for Reuters by Barbara Lewis and Dmitry Zhdannikov. Additional reporting for Reuters by Sanjeeban Sarkar in Bangalore and John Tilak in Toronto.

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Environmental campaigners have demanded a ban on glyphosate, which is used in products such as Monsanto’s Roundup, on the grounds it can cause cancer, though EU and U.N. scientists disagree on whether there is a link.

The European Commission has proposed glyphosate be approved for 15 years when an existing licence expires at the end of June.

Wednesday’s European Parliament motion supported renewal for seven years and urged a ban on non-professional use, as well as in and around public parks and playgrounds.

Angelique Delahaye, a French member of the European People’s Party, the main centre-right group in the parliament, said many people were concerned but farmers needed glyphosate.

“The agricultural sector depends highly on it and it is absolutely necessary to find solutions to replace it before totally forbidding it,” she said.

Wednesday’s motion is not binding, but can influence member states so far undecided on whether to approve glyphosate’s use.

Member states were initially expected to extend approval in March, but EU sources, speaking on condition of anonymity, said there was not enough support to reach a majority decision so the vote was deferred.

The European Food Safety Authority, which advises EU policymakers, issued an opinion in November that glyphosate was unlikely to cause cancer.

But the World Health Organization’s International Agency for Research on Cancer (IARC) has classified glyphosate as “probably carcinogenic to humans.”

A closed-door EU committee on pesticides is due to meet next on May 18-19, though a different committee could debate the issue earlier.

Among big EU member states, France has voiced opposition to glyphosate, while Britain and Germany are said to back its use.

The Green Party, which wants a ban, said European governments and the European Commission could not ignore the concerns raised by the European parliament.

“This is a shot across the bow of the Commission and it must now work with EU governments to address these concerns,” Green food safety and public health spokesman Bart Staes said.

The Glyphosate Task Force, set up to represent the industry, said in an emailed statement that glyphosate was “a key tool for the control of weeds and the protection of crop yields”.

“An informed debate cannot be achieved through scare-mongering or the promotion of misinformation and unsubstantiated claims,” it said.

— Barbara Lewis is Reuters’ senior EU energy and environment correspondent in Brussels.

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Experts from all 28 member states attended a closed-door meeting on Monday and Tuesday in Brussels, which had been expected to endorse a European Commission proposal to extend authorization of glyphosate for 15 years until 2031, EU diplomats said.

Commission sources said the meeting stopped short of a vote and the discussion would continue at another session of the committee on May 18-19, or possibly before.

Already on Monday, it had become clear a decision was very unlikely after France said last week it was opposed to approval of glyphosate and diplomats said the EU’s biggest power, Germany, planned to abstain from any vote.

The Commission has said it needs a decision over the coming weeks to prevent a legal vacuum when an existing approval expires at the end of June.

Before the meeting, the European Food Safety Authority, which advises EU policymakers, issued an opinion that glyphosate was unlikely to cause cancer. But the World Health Organization’s International Agency for Research on Cancer (IARC) has classified glyphosate as “probably carcinogenic to humans”.

Environmental campaigners have called for a ban. “As long as there is conflicting scientific advice, glyphosate should not be approved for use in the EU,” Greenpeace EU food policy director Franziska Achterberg said.

A statement on the website of Monsanto, which calls Roundup the flagship of its agro-chemicals business, said it strongly disagrees with the IARC’s classification. It has filed a legal challenge in the United States.

The Glyphosate Task Force, which brings together Monsanto and other companies, said there had been a rigorous assessment of consumer safety and it expected approval in the coming weeks.

— Barbara Lewis is Reuters’ senior EU energy and environment correspondent in Brussels.

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Experts from all 28 member states attended a closed-door meeting on Monday in Brussels, which had been expected to endorse a European Commission proposal to extend authorization of glyphosate for 15 years until 2031.

In an email, the European Commission said the meeting would continue Tuesday and it could not yet confirm the outcome.

It has said it needs a decision over the coming weeks to prevent a legal vacuum when an existing approval expires at the end of June.

Two EU sources, speaking on condition of anonymity, said they no longer expected a decision at this meeting after France said last week it would oppose extending approval, while EU diplomats said Germany planned to abstain.

“It can go ahead in another group in the coming weeks, months,” one source said.

“A decision is very unlikely,” another said, referring to this week’s talks.

Ahead of the meeting, the European Food Safety Authority (EFSA), which advises EU policymakers, issued an opinion that glyphosate was unlikely to cause cancer.

That conclusion was at odds with the view of the World Health Organization’s International Agency for Research on Cancer (IARC). The difference between them has stoked a fierce debate.

Environmental campaigners have called for a ban. In a statement, Greenpeace said governments should oppose renewing the EU licence for glyphosate “as long as uncertainty remains over the risks it poses.”

Monsanto, which calls Roundup the flagship of its agro-chemicals business, said it strongly disagrees with IARC’s classification of glyphosate as “probably carcinogenic to humans.” It has filed a legal challenge in the U.S.

The Glyphosate Task Force, which brings together Monsanto and other companies, said there had been a rigorous assessment of consumer safety and it expected approval in the coming weeks.

— Barbara Lewis is Reuters’ senior EU energy and environment correspondent in Brussels.

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The European Food Safety Authority (EFSA), which advises European Union policymakers, issued an opinion in November that glyphosate is unlikely to cause cancer.

That was at odds with a view from the World Health Organization’s International Agency for Research on Cancer (IARC), sparked outrage among environmental campaigners and divided the scientific community.

The IARC said in March that glyphosate is “probably carcinogenic to humans” while environmental groups have been calling for a ban on glyphosate.

Ninety-six academics from around the world signed an open letter to European Health Commissioner Vytenis Andriukaitis, dated Nov. 27, urging EU authorities to ignore the European watchdogs’s opinion.

“We urge you and the European Commission to disregard the flawed EFSA finding on glyphosate in your formulation of glyphosate health and environmental policy for Europe,” the letter said.

It was written by Christopher Portier from the U.S.-based non-governmental organization the Environmental Defense Fund. Portier was also a specialist consulted during the IARC’s research on glyphosate.

The letter called for “a transparent, open and credible review of the scientific literature.”

EFSA’s opinion could lead the 28-member European Union to renew approval for glyphosate, which was brought into use by Monsanto in the 1970s and is used in its top-selling product Roundup and many other herbicides around the world.

In a reply to Portier dated Jan. 13, EFSA executive director Bernhard Url described glyphosate as “a keenly debated issue.”

“I strongly disagree with your contention that EFSA has not applied open and objective criteria to its assessment,” Url wrote in the letter, seen by Reuters.

Url said representatives of EFSA and the IARC would meet early this year to clarify differences of view between the two bodies and that the IARC evaluations “represent a first step”.

EU sources said the meeting would probably take place in Brussels in mid-February.

EFSA, based in Parma, Italy, also noted its reply was to Portier and the scientists who signed the letter, not the IARC.

“We should not compare this first screening assessment with the more comprehensive hazard assessment done by authorities such as EFSA, which are designed to support the regulatory process for pesticides in close co-operation with member states in the EU,” Url said.

No one at the European Commission or Monsanto was immediately available for comment.

A spokeswoman for IARC told Reuters the Lyon-based agency did not wish to comment at this point.

–– Barbara Lewis is Reuters’ senior energy and environment correspondent for the EU. Additional reporting for Reuters by Kate Kelland.

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The EFSA advises EU policymakers and its conclusion could lead the 28-member European Union to renew approval for glyphosate, which was brought into use by Monsanto in the 1970s and is used in its top-selling product Roundup as well as in many other herbicides around the world.

Environmental groups have been calling for a ban after the International Agency for Research on Cancer (IARC), part of the World Health Organization, said in March that glyphosate was “probably carcinogenic to humans.”

A campaign group said 1.4 million people had signed a petition calling on the European Union to suspend glyphosate approval pending further assessment.

The EFSA said it carried out a thorough analysis and took account of the IARC’s findings.

“This has been an exhaustive process — a full assessment that has taken into account a wealth of new studies and data,” said Jose Tarazona, head of the pesticides unit at the EFSA, based in Parma, Italy.

“Regarding carcinogenicity, it is unlikely that this substance is carcinogenic.”

The EFSA is proposing a limit on the maximum safe daily dose over a period of time, of 0.5 milligrams per kilogram (mg/kg) of body weight. It is also proposing a new acute limit, of the same level, for a single intake of glyphosate over a short period, for instance in one meal.

The scientists say an 80-kg person could eat food containing a residue of 40 mg of glyphosate per day for the rest of their life. Monsanto said that was the equivalent of eating 400 kg of fruit or vegetables a day.

EFSA scientists, who worked with experts from EU countries, said their study differed from the IARC’s in that it considered only glyphosate, whereas the IARC had assessed groups of related chemicals. They said the toxic effects could be related to reactions with other constituents.

One of the 28 EU nations, Sweden, voiced reservations, saying it “considered that the classification criteria for limited evidence of cancer in humans were fulfilled,” the EFSA said.

The EU must decide over the coming months whether to renew existing approval for glyphosate use.

Greenpeace called the EFSA’s report “a whitewash.”

“EFSA has defied the world’s most authoritative cancer agency,” Greenpeace EU food policy director Franziska Achterberg said in a statement.

Monsanto and other users of glyphosate welcomed the report.

“It confirms the previous evaluations of glyphosate by regulatory authorities around the world, which have consistently concluded that the application of glyphosate poses no unacceptable risk,” Richard Garnett, chair of the Glyphosate Task Force, said in a statement.

The GTF brings together representatives of Monsanto and other companies.

Commission spokesman Enrico Brivio said the Commission took note of the report and that EU regulators had until June next year to take a decision.

— Barbara Lewis is Reuters’ senior energy and environment correspondent for the EU and is based in Brussels.

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Nineteen out of 28 EU member states have requested opt-outs for all or part of their territory from cultivation of Monsanto’s MON810, the sole GMO crop already approved for cultivation, or for pending applications.

They were using a law signed in March giving countries opposed to the technology the right to seek exclusion from any approval request for GMO crop cultivation even if strains have been approved at EU level.

Although widely grown in the Americas and Asia, public opposition is strong in Europe against GMO crops, which have had their DNA altered, often by introducing genes from a different species to boost their resistance to pests or herbicides.

France, among the most vocal opponents to the technology and the bloc’s largest grain grower, has banned Monsanto’s MON810 maize strain since 2008, citing “serious doubts” it was safe for the environment.

It was among the first countries to use the opt-out scheme to ensure its ban remained in place, followed by other large maize growers such as Italy, Hungary and Germany.

Monsanto, which says its maize is harmless to humans and wildlife, asked that its 10-year clearance be renewed and seven new maize strains developed by DuPont Pioneer, Dow Chemical and Syngenta are in the approval process.

GMOs welcome in Romania

Although it remains unclear how long it could take for new GM seeds to be available in countries that did not block them, farmers and feed producers have little doubt output will grow.

“Romanian grain farmers will gladly embrace the genetically modified maize crops,” said Laurentiu Baciu, president of the LAPAR league of Romanian farmers, which unites about 60 per cent of the Black Sea country’s acreage.

“It’s common sense that any maize farmer, be it in Spain or in Portugal or in Romania, would like to reduce production costs and eventually reap a bigger harvest,” he said, estimating that GM maize strains under approval would boost yields by at least 15-20 per cent.

Approved in Canada since 1997, MON810 has been cultivated in Portugal and Spain for years, with 131,500 hectares in Spain last year, farm ministry data shows.

In Romania, the second-largest maize producer after France, the area sown with GMOs has decreased in recent years but Baciu expects output to pick up.

Environment campaigners have decried the EU approval system for new GM crops and called for it to be reformed.

Despite public hostility to genetically modified foods, Europe is one of the world’s major buyers of biotech grain. There are nearly 60 GM crops approved for use in the EU, mainly for animal feed.

“These new strains will certainly find an outlet in sectors that don’t ban GMOs, especially in animal feed,” said Stephane Radet, director of French animal feed maker group SNIA, noting that when grown legally GMOs could travel freely within Europe.

— Sybille de La Hamaide is a senior Reuters correspondent covering agriculture and commodities from Paris. Barbara Lewis is Reuters’ EU energy and environment correspondent, based in Brussels. Additional reporting for Reuters by Radu Marinas in Bucharest and Emma Pinedo Gonzalez in Madrid.

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