Canadian fertiliser giant PotashCorp, one of the world’s largest potash producers, has agreed a $36bn merger with Agrium, a rival fertiliser company also headquartered in Canada that mainly produces nitrogen.

The proposed merger of the two giants will create a new company that will be the world’s largest crop nutrient producer with annual sales of more than $20bn and estimated earnings (EBITDA) of $5bn.

In total, Agrium produces close to 12m tonnes of fertiliser annually from its Calgary base in Canada, with almost half of this accounted for in nitrogen production (5.8mT).

PotashCorp, which is based in the Saskatchewan province of Canada, markets almost 18mT of fertiliser, the majority of which is potash at more than 9mT.

Agrium and PotashCorp say they expect to wring more than $500m in operating synergies from the merger as both companies bid to tackle the continued slump in global commodity prices. While this is the first large-scale merger in the fertiliser sector, it may be a sign of things to come just like what has happened in the agrochemical industry where there has been a wave of large-scale consolidation in the last 12 months.