Canpotex leads to fewer jobs in Sask. mining – by Kai Xue (Saskatoon StarPhoenix – June 26, 2014)

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Xue is a corporate lawyer in Beijing and food security activist. This is his personal opinion. To create jobs in Saskatchewan and help the hungry in poor countries, the province should reconsider its support for Canpotex.

The Saskatoon-based export cartel is composed of PotashCorp, Mosaic and Agrium, with each potash producer holding a fixed share in its sales. Canpotex and another cartel in Eastern Europe formed by Russia and Belarus controlled most of the world’s potash reserves and were able to until recently dictate the world price.

Canpotex is a legal cartel that aims to raise prices outside of Canada and is therefore exempt from enforcement under the Competition Act.

Saskatchewan strongly supports Canpotex, stemming from the belief that what is good for PotashCorp is good for the province. This conclusion is a mistake, based on assumptions about the economic benefit of the cartel in tax revenue for the province, jobs for locals, and the ownership of Potash-Corp.

By raising potash prices, Canpotex is assumed to create mining jobs. After all, in the mining of other minerals, a higher price leads to expansion of operations and more jobs. However, Canpotex raises prices not because farmers want to buy more potash but because its members cut off supply and artificially inflate the world price.

So if Canpotex did not exist, the price for potash would be lower and farmers would buy more. Higher demand for potash would lead to the hiring of new miners and job security for working ones.

Last July, the Eastern European cartel upholding the system temporarily collapsed, and the price of potash tumbled. In reaction, PotashCorp and Mosaic have terminated employment for hundreds of workers in Saskatchewan, mostly represented by the United Steelworkers.

The corporations did not lay off miners because of low prices. Sean Silcoff, a Globe and Mail columnist, has suggested the layoffs by PotashCorp could have been an inducement to the Eastern European cartel to reconcile.

For the rest of this column, click here: http://www.thestarphoenix.com/business/Canpotex+leads+fewer+jobs+Sask+mining/9975960/story.html