Canada’s PotashCorp. of Saskatchewan (PCS), the largest potash producer, made an offer to acquire Germany’s K+S, the world’s largest salt producer and the No. 6 potash producer. A price was not disclosed, but it would be the biggest deal in the potash business since the Canadian government rejected BHP Billiton’s $7.8 billion takeover bid for PCS in November 2010. K+S said the process was ongoing and it is currently assessing available options.

Last year, PCS produced 12.2 million metric tons (mt) from its six mines in Canada — Allan (3.2 million mt), Cory (2 million mt), Lanigan (2.2 million mt), Patience Lake (300,000 mt), Rocanville (2.7 million mt) and New Brunswick (1.1 million mt). PCS also owns 28% of the Arab Potash Co. (2.5 million mt/y total production), 14% of Israel Chemical Ltd. (6 million mt) and 22% of Sinofert (a Chinese fertilizer importer and distributor).

K+S has been mining salt for 120 years. Annually it produces a little more than 3 million mt of potash. The company’s subsidiary, K+S Potash Canada is launching the Legacy project near Moose Jaw. When it’s commissioned in the summer of 2016, the Legacy mine will be the first new greenfield potash project in Saskatchewan in nearly 40 years. The mine is expected to produce 2 million mt/y when it reaches commercial production in 2017.

The potash market has recovered somewhat from the price collapse that occurred when Uralkali withdrew from the Belarusian cartel in July 2013. Potash prices dropped 25% to roughly $300/mt. More recently, record demand levels and a tighter supply supported an increase in potash prices during 2014, according to PCS. Chinese consumption alone increased by more than 2 million mt. Latin America also set records for potash consumption.

For 2014, PCS said global potash shipments reached a record of nearly 63 million mt. Basic supply-demand fundamentals were in play; low distributor inventories and strong growth in consumption were the major drivers. Volatile currency markets, lower crop prices and higher inventories in some markets could result in lower shipments in 2015.

Prices for potash, however, have been under pressure during the first half of 2015. U.S. potash prices have moved lower due to a delay in spring demand, higher warehouse inventories and increased offshore imports. Brazilian prices declined primarily due to slower fertilizer demand in early 2015 as growers assessed the impact of lower agricultural commodity prices and a weaker currency.

In 2015, total sales are expected to decline along with global demand. Shipments from North American potash miners, however, are expected to remain the same as 2014. With annual potash contracts for China and India now in place, PCS said it expects global shipments to accelerate.