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In a sign of just how quickly global commodity markets have deteriorated, Potash Corp. of Saskatchewan Inc. is mothballing one of its newest mines – a $2-billion New Brunswick operation that was in production for little more than a year.
The suspension of potash production at the Picadilly, N.B., mine will throw 420 to 430 people out of work. That comes on top of the permanent closing of Potash Corp.’s Penobsquis mine in November, which cost 140 contract jobs in the province.
Plummeting potash prices are mainly to blame. The crop nutrient began its swoon four years ago as weak crop prices and currency declines pinched demand. Prices also suffered from increased competition following the breakup in 2013 of a Russian-Belarussian marketing cartel that previously helped limit supply.
In recent months, the commodity’s swoon has picked up speed, with some prices falling by a quarter since last spring. That has ramped up pressure on Potash Corp., driven down its share price and increased doubts about whether it can sustain its large dividend.
The potash collapse left the world’s largest fertilizer company with little choice but to shutter its New Brunswick mines, which are its highest-cost operations, chief executive officer Jochen Tilk said in a phone interview.
“Our employees [in New Brunswick] have been phenomenal,” he added. “That makes this particularly sad. There is nothing they could have done differently.”
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