By Rithika Krishna and Rod Nickel
(Reuters) -Nutrien Ltd, the world's largest fertilizer producer, said on Thursday it will increase its Canadian potash production by 20% to an annual 18 million tonnes by 2025, helping to address tight supplies that have contributed to a global food shortage.
Potash prices have soared since the West imposed sanctions against Russia for Moscow's invasion of Ukraine, crimping an already tight fertilizer market.
Russia and Belarus, which also faces sanctions, are the world's second- and third-largest producers of the crop nutrient, while Canada is the No. 1 producer.
"The world needs these volumes in order to feed people well," said Ken Seitz, Nutrien's interim chief executive, at a meeting with investors.
Seitz said it will take at least several years to replenish global crop supplies and for Russian and Belarussian potash trading volumes to return to normal levels.
Nutrien's expansion falls well short of fully replacing the eastern European production. The world is short 10 million tonnes from that region and Nutrien's extra output of 3 million tonnes annually by 2025 should be quickly absorbed, said RBC Capital Markets analyst Andrew Wong.
The potash ramp-up will use Nutrien's existing mines in the province of Saskatchewan.
Wong estimated the expansion's cost at $300 million to $900 million.
The company said it was advancing previously announced boosts of its nitrogen fertilizer capacity to add 500,000 tonnes annually by the end of 2025, and is considering further expansion.
Nutrien also said it plans to repurchase an additional $2 billion worth of shares.
Nutrien's shares rose 3.3% in Toronto.
(Reporting by Rithika Krishna in Bengaluru and Rod Nickel in Winnipeg; Editing by Maju Samuel, Vinay Dwivedi and Marguerita Choy)