Intrepid Potash: An investor's guide to the American producer

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Part 3
Intrepid Potash: An investor's guide to the American producer PART 3 OF 8

US: One location for all of IPI’s assets

Intrepid Potash, Inc. (IPI) is headquartered in Denver, Colorado. It has two production facilities in Utah and three in New Mexico, and all projects are located within these states.

US: One location for all of IPI’s assets

Where does IPI mine?

Unlike its peers, such as Potash Corp. (POT) and Mosaic Co. (MOS), IPI owns all of its five production facilities in the U.S. Both the Moab mine and the Wendover facility are located in Utah. There are two mines in Carlsbad, New Mexico—the West and East mines, as well as a warehouse facility for both these mines called the North facility. All these facilities produce a total of 760,000 tons of potash annually.

In 2012, IPI opened a new production facility in Carlsbad called HB Solar Solution Mine. With the construction of the mill complete in late 2013, the company expects to begin producing potash from the this mine. This new facility is expected to produce between 150,000 and 200,000 tons of potash annually, an increase of 23%. All the facilities, including HB, have a lifespan between 28 and 165 years.

The transportation advantage

IPI sells exclusively to the U.S. market. Because all of its assets are located in the U.S., IPI has an advantage in terms of lower transportation costs.

The Corn Belt, for example, is a region in the Midwestern U.S. where most of the potash acquired in the U.S. is consumed. Iowa, Illinois, and Indiana are some of the states in this region. The proximity of IPI to this region significantly reduces the transportation costs, which in turn allows IPI a higher average selling price.