So depending on where that goes ultimately, you can start to put those pieces together and see appreciable improvement in EBITDA from what we’re at right now.
Operator: Our next question comes from Vincent Andrews from Morgan Stanley. Please go ahead with your question.
Vincent Andrews: Thank you. Bruce, is there a way to hedge in the value of the Ma’aden position since it’s a publicly traded equity. I’m just looking at their share price being at record level and yours not. So I’m just wondering if there’s a way you could maybe crystallize or walk in that value now and maybe put it to work somehow in your own equity ahead of the lockup period on the shares?
Bruce Bodine: Yes. Thanks for the question, Vince. But let me turn it over to Clint and as he’s been involved on a lot of the deal making on this.
Clint Freeland: Yes, Vincent, I would say, look, we’re protecting our investment, I think, could be important. And certainly, we’ll look at the different options that are available to us. I think we’d have to consider the liquidity of the market that it’s traded on and other factors like that. So I would say more to come on that. We’ll need to continue thinking through exactly the best way to manage that position. But I would say right now, we’re not ready to speak with any clarity on that topic any further.
Bruce Bodine: I apologize. I was looking at the wrong name on the screen, sorry.
Operator: Our next question comes from Ben Isaacson from Scotiabank. Please go ahead with your question.
Viktor Sayek: This is Viktor stepping in for Ben. On your Q1 slide deck under performance highlights, you referenced that phosphate supply and demand looks particularly compelling. Two questions. First, can you provide some color on that statement? How do you see the supply and demand balance evolving that makes it particularly compelling? And then by extension, why is outlet for potash, not particularly compelling?
Bruce Bodine: Thanks, Victor. So I’ll start with phosphate. We definitely view that the S&D in the overall market is tight on the phosphate side. A lot of that is due to really China backing off on their historical exports. And exports from a few years ago are down 25% from some of the high watermarks on that side, which is a significant reduction of 4 million or so tonnes out of the supply side. Demand has recovered back to kind of pre-war levels overall and pretty close to that with the appreciation that we have in the market making this year. And there really is no new significant supply. OCP has had a little bit of supply come on. But most of that is in the market now. It may be a small amount remaining. And then the other factor is China is really focusing on shifting some of their agricultural P205 into industrial to support their lithium iron phosphate battery production.
So that competition for that phosphate molecule, particularly in China, is causing supply tightening even further on the agricultural phosphate supply. So, those combinations really are the structural changes that have been significant recently. But even if you go back in time and you look at China’s production capability, and it underpins why their exports are down. Really, there’s been a structural change in their output of significance, 25%, 30% over the last, say, decade. And couple that with some of the policy changes, their domestic food security focus, the LFP batteries, as we talked about really is a structural change there that has made the phosphate market, particularly tight. On potash, it’s definitely not the tightness that we feel on phosphate.
But we would say that it’s pretty balanced. Just a couple of years ago, we were wondering if potash demand would ever return to that kind of 70 million tonne mark and sure enough, it has. And we believe that it’s going to stay that way — this year, if not a little bit higher, and then continue to appreciate at kind of that 1% to 2% compound annual growth rate. But the Russians on the supply side and the Belarusians have been very effective at getting back to kind of their pre-war pre-sanctioned levels, which has allowed kind of a more balanced supply. We also see some additional supply coming out of Laos. But with kind of our estimate of last year to this year, but just under 3 million tonne growth in the market, a lot of that is being absorbed by China — or I’m sorry, by Russia and Belarusia and then a little bit by Laos.
But the rest would be absorbed with any excess capacity in Canada. So pretty balanced constructive. And again, everything underpinned by population growth, good ag fundamentals driving that demand at that kind of good growth rate over the foreseeable future. Jenny, anything that maybe we should add.
Jenny Wang: Thanks, Bruce. I think you got that covered. Probably just some data point on phosphates. In Q1, Chinese export actually were reduced 70%, 70 percent, which was 1 million tonnes reduction. What does mean to the market? At the end of the spring season in northern hemisphere market, the major market ended the season with a very low inventory. For India, the inventory at the end of March was down by 28% year-over-year, which is 800,000 tonnes lower than the last year, which was already low. In Brazil, the inventory level was down by 30%, which is 700,000 tonnes year-over-year. So all this very low inventory in the major market are portending a very strong pent-up demand for the rest of the year. So I just want to add that data point on the phosphate market.
Operator: Our next question comes from Joel Jackson from BMO. Please go ahead with your question.
Joel Jackson: I want to follow up on the Ma’aden transaction. Talk about what other maybe deals could be on the table? Would you be looking at shopping the operational stake in the JV to other like producers to be able to cash out be sooner by small evaluation, like were there other deals on the table? Why was this the best deal? You did talk about the rationale, but just that. And also, I think there was a view when you got involved with this maybe a decade ago that this is going to help automotive consolidation phosphate, right? Potash caught back then and OCP was starting to work together. This maybe you and Ma’aden working together a bit, as you’re going to help Ma’aden, ramp up their operation, get expertise and maybe work together a bit more. Is it maybe a bit of a deconsolidation in the space or not really? Thanks.
