Excerpt from Potash: An Inside Account of Saskatchewan’s Pink Gold – by John Burton

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John Burton grew up on a farm in Saskatchewan, studied at the University of Saskatchewan and the London School of Economics, was elected to Parliament, and played a major role in Saskatchewan’s 1975 decision to acquire potash-producing facilities. He was a member of the Board of Directors of the Crown-owned Potash Corporation of Saskatchewan from 1975 to 1982.

CHAPTER 2: Beginnings and Development

Tommy Douglas, political leader of the CCF (Co-operative Commonwealth Federation), led the party to a massive election win on June 15, 1944. He had a strong complement of competent and dedicated people to choose from in selecting a Cabinet for his government. One of those people was Joe Phelps, a dynamic, aggressive, action-oriented man. He was a fiery speaker known for his excitability, verbosity, and temper. Douglas appointed him minister of natural resources but with some misgivings. His mandate was to diversify the economy, and Phelps produced results with a wide variety of initiatives, some of which got the government into trouble. He and his officials constantly looked for new opportunities.

One official picked up a report supposed to be kept hush-hush that some stuff called “potash” had been found near Radville by one of the companies drilling for oil in 1942. The informant had to emphasize that the “stuff” was much more important than any of several salts found on the surface.

This information was of interest since there was no knowledge of the find until then. Other indications of potash came to light subsequently, and by 1946–47, potash was identified as a resource with significant potential for Saskatchewan. The province had endured more than a half century of struggles and problems during its early development phase, with many harsh times that often tempered the dreams of its pioneers. Thus, the prospect of new opportunities was greeted eagerly and created new hope for the struggling province.

This caused some excitement within the government, and Phelps wanted it followed up. The department made special efforts to determine the extent and quality of the resource and continued its efforts for some years. Enthusiasm was tempered, however, as it was recognized how difficult it would be to penetrate some underground water-bearing formations safely. Discussions also commenced on who should develop the resource. The Douglas CCF government still had considerable faith in public ownership in spite of difficulties encountered in some early ventures. The initial government position was that there had to be some degree of public ownership, a position Phelps would press vigorously.

The impetuous Joe Phelps was defeated in the 1948 election. He had accomplished much but left a legacy of problems, many in the resource sector. He was replaced by the more cautious, careful J. H. Brockelbank as minister of natural resources. A veteran of World War I, he carved out a farm for himself from bush in the northeast area of the settled portion of the province, became active in the CCF, was elected an MLA in 1938, and was Leader of the Opposition for a time. In government, he became the “gray eminence” and was often the troubleshooter who dealt with special problems or issues.

His shrewd, low-key approach was invaluable to the government. One of his jobs was to smooth out relations with the private resource industry, which had become “rocky” because of Phelps’ style and his heavy emphasis on public ownership, some of it spelled out in government publications. After the government’s near defeat in the 1948 election, the CCF modified its emphasis on public ownership, and more recognition was given to the role of private enterprise. Brockelbank personified that stance. In time, both Tommy Douglas and Brockelbank, or “Brock” as everybody affectionately called him, became highly respected in the resource industry.

But policy shifts, and Brock’s presence could not make some serious problems go away. The Government of Saskatchewan was coping with serious financial constraints. The province had just emerged from the ravages of the 1930s drought and depression, followed immediately by wartime dislocations and aggravations. The provincial debt was staggering in relative terms, with gross debt of $213 million when the annual budget was just over $30 million. A portion of the budget had to be allocated to debt repayment, while the demand for services was high.

In spite of these problems, the government explored the possibility of a joint venture in potash with a private firm, but there were no takers. The federal Liberal government was also approached with the proposition of a joint-development project. The idea was rejected flatly by Hon. J. A. Glen, a Liberal cabinet minister from Manitoba. After the government had decided that private investment was the only route open to it, a private firm did approach the province about a private-public project, but by that time the government was not prepared to reverse its position.

The Saskatchewan government set up an internal potash committee in 1949 headed by Brockelbank, as minister, to manage all activity concerning potash development. After exploring all options, the minister concluded at a meeting on November 22, 1950, that the government would have to abandon its insistence on crown participation. That was a key turning point. This left-wing government encountered a predominant attitude in the outside world that the role of government was largely to stay out of the way except when help was needed. The mining, oil, and gas industries had long enjoyed tax advantages, modest royalties, and substantial assistance in development. The Saskatchewan government did not have the clout to change the established pattern of development found in those extractive industries throughout North America, the same as in many other parts of the world.

Pursuing private-sector development was not easy either, and progress was slow. Apprehension about the existing political environment was one factor, but beyond that, problems anticipated from the water-bearing formations encountered before reaching potash were recognized as staggering. Some of these formations had water under high pressure (as much as 1100 lbs. per sq. inch) that were very difficult to control and could quickly flood a mine completely. The risks involved could result in the complete loss of large capital expenditures. Potential investors were understandably cautious.

In any case, it generally takes time before a new resource is developed, as companies assess matters and make decisions. A demand–supply balance at the time in international markets also reduced pressure for new capacity. On the other hand, Saskatchewan was eager and anxious to see the resource developed. Douglas, Brockelbank, and others also had to mollify ardent CCF supporters who were uncomfortable with the new approach. I remember Brock saying at CCF Council meetings, “In our first term, we took steps to share the economic pie more evenly. Now, we have to create a bigger pie.”

It took almost a year before the first potash exploration permit was issued to Western Potash Corporation Ltd.5 It first tried to develop a solution mine, requiring less investment, where water would be pumped down to the potash to brine it out. When that failed, it commenced sinking a mine shaft at Unity in late 1952. It took some time for the shaft even to reach 280 feet (potash was well over 3,000 feet underground at that location) as water-bearing strata were already posing serious problems.

Progress was painfully slow, and by 1960, the mine shaft had only reached a depth of 1,800 feet, barely halfway to the potash. At that level, the major water-bearing formation, the Blairmore sands, was encountered. In spite of previous experience in managing water veins, the miners could not cope with the rush of water, clay, shale, and sand and had to scramble for the surface as the shaft flooded to within 360 feet of the surface. That was the end of that mine. Reaching potash was not going to be easy.

Fortunately, other things were happening. In 1951 and 1955, two major potash producers entered the Saskatchewan scene. They had more financial and technical strength than the first developer, but it still took them a long time to reach their goal. The first, Potash Company of America (PCA), started a mine east of Saskatoon, struggled with severe water problems, and finally commenced operations seven years later in 1958. It was in production for only a few months when more water problems forced it to shut down, and it took another seven years before it resumed operations in 1965. International Minerals and Chemical Corporation (IMC) started a mine shaft (25 feet outside diameter; 18 feet inside diameter) nine miles northeast of Esterhazy, but it too encountered flooding in 1958.

Many techniques were tried in order to overcome the problem. “For some time, we thought the project might have to be abandoned altogether,” said Merv Upham, general manager, with a grimace in June 1962 while showing the facilities under construction to Hon. Russ Brown, Minister of Industry, and myself, a candidate in the 1962 federal election. Finally, the problem was solved with the help of a German company, Thyssen Mining Construction, that used a unique “tubbing” process comparable to tunnelling under a river. The 200-feet water-bearing formation was frozen and the shaft was sunk through the frozen formation. Then cast iron tubbing was installed and wooden wedges were pounded between it and the frozen surface. The mine went into operation in autumn 1962, more than seven years after work had started.

Government actions and statements both to the industry and to the public underlined its commitment to private-sector potash development. I was on a platform in Esterhazy, near the IMC mine site, in March 1958 with Brockelbank during a federal election campaign. In response to a barbed question about his view of public versus private ownership of mining, Brock stated his view clearly that such developments were best left to the private sector. He said there were all sorts of problems for government or public enterprises in undertaking that sort of activity.

Brock was a long-time friend and colleague of my father and, in fact, was a pallbearer at his funeral. I knew him as a friend as well. After the meeting that night, he and I had a drink of Scotch whiskey in his hotel room. He “let his hair down” and outlined his difficulties and frustrations with potash over the past 10 years. He said, “We couldn’t develop it ourselves so we had to get the private sector to do it. They have had a tough time. In the meantime, we have done everything we can to help and now all we can do is wait. If we could just get the industry up and running, it would make such a difference to Saskatchewan. We have done a great deal for the province but there is still so much more to be done.”

When success finally came, it was greeted with a mixture of relief and elation by all concerned. The successful companies could salvage their investment, which had doubled from original expectations, but the first company lost everything. The government was anxious to see more development now that it was shown the water problem could be overcome. The province’s economy was improving because of oil and natural gas development, a steel mill, a cement plant, et cetera, but improvement was still not as fast as desired, and comparisons with the Alberta boom were a constant aggravation. The government continued to pursue geological investigations to determine the extent and quality of the potash beds. A proposal was developed and costed out for a publicly owned mine. It was rejected because of the risks and the amount of money required. Another proposal was prepared in the early 1960s but was shelved when the CCF lost the 1964 election.