A growing concern

Despite high natural gas prices, Canadian fertiliser maker Agrium has been posting strong profits, while some rivals have struggled. The company’s risk-management strategy has been a significant factor in its success. By Joe Marsh

For a company that relies so heavily on natural gas for its products, Canadian fertiliser maker Agrium is making a tidy profit. A full third of what the company spent on producing its fertilisers in 2004 – $627 million of total production costs of $1.93 billion – went on natural gas, the price of which has remained both high and volatile in recent years.

There are various reasons for the good performance – not least of which is a disciplined hedging strategy. Agrium is something