By Ernest Scheyder
NEW YORK (Reuters) - A federal judge has extended an order keeping Mosaic Co
The company said it would fight the ruling and a related lawsuit filed by the Sierra Club, an environmental group that claims Mosaic's mine operations in South Fort Meade, Florida, damage two watersheds.
The mine has about 15 years of phosphate reserves and produces 6.5 million tons of the fertilizer each year. That represents a third of Mosaic's yearly phosphate capacity and 4 percent of the world's.
At issue is a permit from the U.S. Army Corps of Engineers that would let Mosaic expand the mine's size.
The U.S. District Court for the Middle District of Florida put that permit on hold last year. In April, Mosaic said it would expand phosphate mining at South Fort Meade anyway, but not in wetland areas.
From Mosaic's perspective, the injunction applied only to wetland mining, and it was free to mine.
That move appeared to irk Judge Henry Lee Adams Jr., who said in a ruling late Friday that the mining expansion "alters the course of this very complicated case."
"Any harm to Mosaic is largely self-inflicted," Adams said in his ruling. Mosaic has had ample time since the beginning of the lawsuit to reapply for necessary permits, he said.
RIVALS AND FUTURE PLANS
Mosaic rival CF Industries
CF Industries CEO Steve Wilson said last May that he was benefiting from Mosaic's headache.
"The biggest advantage that we have is that Mosaic went first," Wilson said. He said that when he does try to expand his own production, he will have a "difficult task.
Plymouth, Minnesota-based Mosaic said its pretax costs will likely jump by $200 million in 2012 because of the injunction.
The company said it will be able to support planned finished phosphate fertilizer production levels through 2012, helped by phosphate rock inventories, higher output from other mines and supplemental purchases of phosphate rock from third parties.
Mosaic processes mined phosphate rock into pebble and fine phosphate, which are turned into diammonium phosphate, or DAP. That is what farmers use in their fields.
During a Reuters reporter's tour of the facility in 2010 before the initial injunction, the company touted the facility's water remediation design, saying it complies with federal and state regulations.
The Sierra Club claims Mosaic's permit to operate does not take into account the damage the water causes.
The company uses draglines -- giant cranes with booms the length of football fields -- to scoop sediment comprising clay, sand and phosphate about 100 feet deep. Using a series of washes, the phosphate rock is separated from the clay and sand and sent by train for processing.
The facility reuses about 98 percent of its water and employs giant retaining ponds to separate clay and sand from water, Mosaic said.
Alligators, wrens, cranes and other wildlife live in or near the retaining ponds.
In the retaining ponds, clay and sand sink to the bottom. The water is deposited into the Peace River watershed, and the clay and sand deposits are turned into orange groves, swampland or forests. However, some retaining ponds have breached in the past, leaching clay sediment.
The South Fort Meade facility employs more than 200 workers.
If the Florida mine closes -- a step that is improbable but not impossible -- the world's phosphate supply would tighten, boosting prices for crops.
"The court's ruling is inconsistent with the overall regulatory environment in Florida and may bring significant hardship to our employees and local communities," Richard Mack, Mosaic's general counsel, said in a statement. "Mosaic continues to stand by the validity of the Army Corps' permit."
Mosaic's shares were down 5.2 percent to $66.93 in morning trading.
Mosaic is set to report its quarterly results on July 18.
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(Additional reporting by Thyagaraju Adinarayan in Bangalore. Editing by John Wallace and Robert MacMillan)