Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from Steve Byrne – Merrill Lynch.
Steve Byrne – BAS-ML
On your inventory build the last three quarters looks like around 200,000 tons and I know you're moving product back into the channel. How much inventory do you now have on hand at the mines and in the channel?
Bob Jornayvaz
I'm going to let Dave answer that.
David Honeyfield
I think your estimate on that is pretty close, Steve. We have a certain amount of our tons that we have moved forward as we've mentioned into warehouses at customer locations. And I think we're doing that all in an intent to make sure that we can keep moving forward on the production front. So overall we believe that making that investment in the inventory is really the right thing for Intrepid and gives us the opportunity to earn the best return here when sales levels pick up. So overall I think it's we're at – the levels that you suggested are pretty reasonable.
Steve Byrne – BAS-ML
And what would you say your effective production capacity for potash will be by year end with those projects that Hugh mentioned being on stream?
Bob Jornayvaz
Hugh, do you want to take that?
Hugh Harvey
Sure, company-wide we should be somewhere between 900,000 and 1 million tons per year of potash capacity after the projects are all finished.
Steve Byrne – BAS-ML
So just taking this one more step, assuming robust demand recovery in 2010 or even a slight recovery given your market share position is relatively small, any reason why your sales volume in 2010 couldn't be upwards of, say, 1.2 million tons?
Bob Jornayvaz
I appreciate your math and I guess that's the case that Intrepid is managing for, hoping that the demand returns to the robust nature that we believe it will. Once again, by having our current tons as forward as we can possibly get them, by having inventory tons at our facilities and by improving our production capacity when we look at the nutrient removal that has occurred, history would tell us that 2010 should be a very good demand year and that's what we're preparing ourselves for.
Operator
Your next question comes from Fai Lee – RBC Capital Markets.
Fai Lee – RBC Capital Markets
I'm just wondering if you could maybe give us additional color on your comments regarding the buyer hesitation regarding potash pricing? What exactly are buyers thinking with given – I'm just curious because – did they not see the pricing that India's contract prices being a floor, or do they see more downside on the spot pricing? I'm just trying to get an understanding on that.
- To read the full transcript on Seeking Alpha, click here »
