Potash Corp. of Saskatchewan Inc.’s announcement that it plans to permanently reduce production at its Cory mine west of Saskatoon, resulting in 140 layoffs, and temporarily halt production at two other operations, is the latest in a long string of industry cutbacks this year. Here’s everything you need to know about Saskatchewan’s potash industry, and the challenges it faces.
Q: What does the province’s potash industry look like?
A: It’s dominated by three companies — PotashCorp, Mosaic Co. and Agrium Inc. — operating nine mines. A tenth, K+S Potash Canada’s Legacy project, is in the commissioning phase and expected to reach full production next year.
Together, these mines have a capacity of more than 30 million tonnes, or about half of total global demand. BHP Billiton has said its Jansen mine — which, at eight million tonnes per year, could be the world’s largest — could come online in the decade following 2020.
Q: Why is the industry in trouble?
A: Potash, which is used as a fertilizer for crops grown around the world, is a sensitive commodity. Industry doctrine states that supply-side management is crucial to meeting fluctuating demand. Potash companies maintain that demand will increase over the long term, as farmers work to feed a growing global population.
But production capacity increases, reduced demand from China and India, and the 2013 breakup of Belarusian Potash Company — which, like the marketing firm Canpotex Ltd., helped manage supply — caused prices to fall sharply to about US$150 per tonne today from about US$900 in 2008.
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