Jim Letourneau's Blog

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Potash Trains

I see unit trains of potash headed towards Vancouver and Seattle regularly. While the picture below is from 2008, they haven't changed much. I'm sure many motorists would welcome a new color scheme for these cars as sooner or later they'll be stuck watching 100 130, 142 or 170 of them roll by at a level crossing.

Potash - still being sold by the trainload. Just like last ye... on Twitpic

Today, I saw another potash train as I headed downtown. I also heard on the radio that potash prices could be headed to $600/tonne by 2012. This "news" is from a widely reported  Goldman Sachs forecast. I could care less about their prediction but it sure made me curious as to the value of the potash contained in one of these Canpotex railcars. Canpotex handles the marketing and distribution of Saskatchewan potash produced by Agrium Inc. (AGU, AUG.TO) The Mosaic Company (MOS), and Potash Corporation of Saskatchewan Inc. (POT, POT.TO).

As we drove through an underpass beneath the rail line I shouted out "Quick!, how many tons can those railcars hold?". Unfortunately my spotters couldn't read the fine print on the railcars as we zipped beneath them. My kids are no longer punching in my Google search orders (how this critical potash information is less important than the number of mosquitoes a bat can eat in an hour is beyond me - welcome to Google Nation) so I had to wait until I got home. It turns out that Canpotex has roughly 5000 rail cars and full unit trains consist of 130, 142 or 170 railcars.

According to the Canpotex website, A 170-railcar train carries approximately 17,500 MT  of potash, and is nearly 2,600 metres long (8,500 feet).

From the above, I'll assume that each railcar carries ~100 tonnes of potash. Using $500/tonne for a price means that each one of those railcars is carrying $50,000 worth of potash. Using the $500/tonne price for a 170 railcar train means that up to $8.75 million worth of potash is rolling through the city on each train. Right in front of our eyes! No armed guards to be seen.

How do you hijack a train?