Hot Picks: Potash market faces supply ceiling as prices lag mine economics

Potash markets remain constrained by limited new supply, even as prices sit well below levels needed to justify new mine development, creating leverage for existing producers with long-life assets and strong balance sheets.

BNN Bloomberg spoke with Taylor McKenna, an analyst at Kopernik Global Investors, about investment opportunities across the potash sector, including producers operating in Canada and Europe, the role of incentive pricing and how supply discipline could support prices over time.

Key Takeaways

• Potash prices are well below the incentive level needed to justify new mine construction, effectively capping future supply growth.
• Existing producers with long mine lives and favourable cost positions stand to benefit most if prices move higher.
• Supply discipline is reinforced by the high capital costs and long timelines required to develop new potash projects.
• Global food demand continues to support long-term potash consumption, even if short-term pricing remains volatile.
• Producers with established infrastructure and distribution networks are better positioned to navigate cyclical downturns.

Read the full transcript below:

ANDREW: Time for Hot Picks, and there’s a common theme today. All three companies are involved in potash, the fertilizer. Our guest’s top pick is K+S, a German potash producer with assets in Canada and Western Europe. We’re joined by Taylor McKenna, analyst at Kopernik Global Investors. Taylor, thank you very much for joining us.

TAYLOR: Thank you, Andrew, for having me today.

ANDREW: Start off with K+S. Why should investors take a look at this name?

TAYLOR: Sure. Let me take a quick step back and talk about potash first. Potash is a key input into global farming. We need it to grow the food we eat every day. We like to invest in these businesses when prices are below the incentive price, and right now potash is well below that level.

The incentive price is north of US$500 per tonne, while potash is trading around US$350 today. That creates significant upside for companies like K+S and Nutrien.

K+S sits in the middle of the cost curve, meaning it is roughly breaking even at current prices. Any increase in potash prices as they move toward the incentive price gives the company a lot of operating leverage and strong optionality. The company also has very long mine lives. As prices move higher over time, we expect K+S to perform quite well.

Our second pick is Nutrien, which is based in Canada. It is the global leader in potash and has the best assets in the industry. While it offers a bit less upside than K+S, we still like the company a lot.

ANDREW: Let’s loop back to K+S for a moment. The company operates the Bethune mine near Moose Jaw, Sask., which it describes as a solution potash mine. Does that change the economics of production?

TAYLOR: It doesn’t change the economics dramatically. With solution mining, the company pumps water or brine underground and then extracts the potash, rather than physically removing rock. It can be lower cost in certain situations.

That particular mine is on the low end of K+S’s cost curve and has performed very well recently. The company also plans to increase production there modestly over the next few years.

ANDREW: Turning back to Nutrien, it’s a very diversified company. Potash is a major part of its business, but are there other reasons you like the stock?

TAYLOR: Potash is the primary reason. Nutrien has the best potash assets in the industry. It also has a strong nitrogen business, although management has discussed spinning that off or selling it, so it plays a smaller role in our valuation.

Another important factor is Nutrien’s global distribution network. It allows the company to sell its products worldwide, particularly across North America and South America. Many of those assets are not replaceable, but again, potash is the key driver for us.

ANDREW: Finally, let’s talk about BHP. The company is expanding into potash with its large mine in Saskatchewan, although the project has faced significant cost overruns. BHP is also heavily involved in other commodities.

TAYLOR: It is. We’re value investors, so we take what the market gives us. For a long time, we were heavily weighted toward precious metals, particularly gold and platinum. We still like those fundamentals, but so does the market. We’ve taken some gains and rotated into large, diversified miners, including BHP.

BHP is the world’s largest copper producer and has a strong global asset base. In addition to potash, it has excellent iron ore assets and a hidden gem in Olympic Dam, which is a polymetallic deposit. We like BHP at current levels.

We would also include Vale, the largest iron ore producer with top-tier assets, and Glencore, which has been in the news frequently.

ANDREW: We have about 30 seconds left. You mentioned the term “incentive price.” What does that mean for a potash producer?

TAYLOR: It refers to the price level needed to justify building a new large-scale potash mine. Nutrien actually discloses this in its presentations. The company estimates that price is north of US$500 per tonne.

Without prices at or above that level, you’re unlikely to see new large mines built. We like investing in that environment because supply is effectively capped while demand continues to grow.

ANDREW: And where is the potash price right now?

TAYLOR: Around US$350.

ANDREW: So, according to Nutrien, we’re still a long way from encouraging new capacity. Taylor, thank you very much for your time.

TAYLOR: Thank you very much for having me.

ANDREW: Taylor McKenna, analyst at Kopernik Global Investors.

---

This BNN Bloomberg summary and transcript of the Feb. 6, 2026 interview with Taylor Mckenna are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.