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Potash/Phosphate

K+S making progress on Bethune potash mine – by Bruce Johnstone (Regina Leader-Post – May 19, 2015)

http://www.leaderpost.com/index.html

Province’s first in 40 years

The $4.1-billion Legacy solution potash mine being built by K+S Potash Canada on the edge of the Qu’Appelle Valley near Bethune, about 75 km northwest of Regina, is still on track and on budget to meet its goal of producing potash by the end of next year.

“Everything’s according to plan,’ said Sam Farris, vice-president and general manager of operations for K+S’s Legacy project – the first new potash mine in Saskatchewan in 40 years. “It’s an aggressive plan, but we’re managing to hold to the plan.’

K+S Group, the parent company of K+S Potash Canada, which issued its firstquarter results last Tuesday, announced that “K+S is well on the way to commissioning the plant as scheduled from summer 2016 onward and producing the first tonnes of potash fertilizers towards the end of the year, thus meeting the investment budget of $4.1 billion.”

K+S Group, which is Europe’s biggest potash producer, said its total capital budget for 2015 was 1.3 billion euros, or just under $1.8 billion Cdn. “Expenditure connected with the Legacy project accounts for most of this figure,’ the Kassel, Germany-based company said.

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Saskatchewan is to mining what Crosby is to hockey – by Bruce Johnstone (Saskatoon StarPhoenix – May 19, 2015)

http://www.thestarphoenix.com/index.html

To call Saskatchewan a major player in the global mining industry is a bit like saying Sidney Crosby is a good hockey player. Saskatchewan is a mining superstar.

It’s the world’s leading producer and exporter of potash, accounting for 30 per cent of the global supply of the agricultural nutrient potassium (one of three essential components of fertilizer, along with phosphorous and nitrogen.)

Potash was the top-ranked commodity produced in Canada in 2013, with a reported value of $6.1 billion, ahead of gold ($5.9 billion) and iron ore ($5.3 billion), according to Natural Resources Canada.

In fact, potash is the only mineral in which Canada is a world leader. And virtually all of that Canadian potash (96 per cent) was produced in Saskatchewan. (The remaining four per cent was produced at the Potash Corporation of Saskatchewan mine at Sussex, N.B.)

Saskatchewan is also a world leader in uranium production, with nearly 16 per cent of the world’s supply of the nuclear fuel source, placing Canada second among uranium-producing nations after Kazakhstan.

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NEWS RELEASE: OVER 1200 STAKEHOLDERS FROM THE WORLDWIDE PHOSPHATE INDUSTRY ARE EXPECTED IN MOROCCO FOR THE THIRD SYMPHOS EVENT.

Casablanca, 18th May 2015: OCP Group is planning its third International Symposium on Innovation and Technology in the Phosphate Industry (Symphos) from the 18th to 20th of May 2015 in Marrakesh, with the theme “Innovation to serve sustainable agriculture”.

This year’s event will bring together over 1200 participants from the phosphate industry from all corners of the world, representing over 45 countries. Symphos 2015, a forum for meetings and discussions between the major international players in the phosphate and phosphate derivatives industry, will build on the previous events, with greater focus on innovation to serve sustainable agriculture. In particular, this year’s event will cover themes regarding industrial processes, elements of value, fertilizers of the future and slow & controlled releases.

The event has become an international benchmark in the sector, offering a forum that promotes diversification, modernisation and development of the phosphate industry and support for the development needs of worldwide agriculture. Aware that innovation is the primary tool for rational and sustainable exploitation of phosphate reserves, OCP Group uses Symphos to highlight its commitment to sustainable and prosperous agriculture throughout the world.

By bringing together the global phosphate community to share expertise, skills and experiences, Symphos aims at contributing to the emergence of the ideas of tomorrow, and taking up the major challenge of soil and resource conservation for sustainable agriculture.

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Joc O’Rourke to succeed Prokopanko as Mosaic CEO – by Dee DePass (Minneapolis Star Tribune – May 14, 2015)

http://www.startribune.com/

Current CEO James Prokopanko is retiring this summer.

The Mosaic Co. has tapped James “Joc” O’Rourke to become the fertilizer giant’s new president and chief executive.

O’Rourke, 54, joined Mosaic in 2009 and since 2012 has served as executive vice president of operations and chief operating officer. He will succeed the retiring James Prokopanko as president and CEO on Aug. 5, the company announced late Wednesday.

“The board has full confidence in Joc and the rest of Mosaic’s talented management team,” said Robert Lumpkins, chairman of the company’s board. “Together, they will help Mosaic build on Jim’s legacy of success for our employees, customers, investors, communities and other stakeholders.”

Before joining Mosaic, O’Rourke was president of the Australia-Pacific region for Barrick Gold Corp. and responsible for Barrick’s 10 gold and copper mines in Australia and Papua New Guinea.

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First Nations businesses growing with Saskatchewan resource boom (Business Vancouver – by Joe Ralko (April 28, 2015)

http://www.biv.com/

Battlefords Agency Tribal Chiefs embark on joint venture that provides services to the energy industry and trains workers for oilpatch jobs

A three-year agreement involving the Battlefords Agency Tribal Chiefs (BATC) and Site Energy Services Ltd. (SES) is the latest example of how the boom in Saskatchewan’s resource sector is helping the growth of First Nations businesses.

First Alliance Energy Services is the name of the new entity expected to generate revenue in the millions of dollars from work in the oilpatch, say BATC and SES officials.

“We felt it was a really good fit for us,” said Ed Standinghorn, director of industry relations with BATC. “In addition to providing a range of services in the oilfield, we also have a training module getting our clients work ready. For example, we help them get their driver’s licences, complete their GED and so on.”

He said the new joint venture is a natural progression of the projects BATC has under its belt. “Work we do is nationally recognized,” Standinghorn said.

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Is Hillary Clinton Taking ‘Blood Phosphate’ Money From Morocco? – by Julian Pecquet (U.S. News and World Report – April 13, 2015)

http://www.usnews.com/

Julian Pecquet is the Congressional Correspondent for Al-Monitor.

Critics of a $1 million Clinton Foundation gift see a ploy to build support for illegal exploitation of the “last colony in Africa.”

WASHINGTON — Presidential hopeful Hillary Rodham Clinton is endorsing the illegal exploitation of disputed lands and risks undermining four decades of UN diplomacy by taking money from Morocco, critics say.

Clinton, who’s expected to announce her candidacy for the Democratic nomination April 12, has come under fire for accepting foreign contributions to the Clinton Foundation, most recently a $1 million donation from OCP, a fertilizer giant owned by the Moroccan government. Left unsaid in the initial reports: OCP — the Office Chérifien des Phosphates — is a major player in the exploitation of mineral resources from the Western Sahara, a disputed territory known as the “last colony in Africa” that Morocco took over after colonial power Spain abandoned it in the 1970s.

“You’ve heard of blood diamonds, but in many ways you could say that OCP is shipping blood phosphate,” Rep. Joe Pitts, R-Pa., told Al-Monitor. “Western Sahara was taken over by Morocco to exploit its resources and this is one of the principal companies involved in that effort.”

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China expands potash holdings (The Australian – April 21, 2015)

http://www.theaustralian.com.au/

Dow Jones – China’s sovereign-wealth fund took command of a 12.5 per cent stake in embattled Russian potash producer Uralkali Tuesday by exercising an option on a convertible bond it bought late last year.

The step represents a big move by China–the world’s largest consumer of the fertiliser additive–to secure steady supply in a market where governments have zealously protected against foreign ownership in the past. The deal comes amid a bruising trade battle between Uralkali and Belarus over the collapse of a sales partnership that rocked global potash markets and landed the Russian company’s chief executive in a Belarusian prison.

The president of Belarus, Alexander Lukashenko, has said the trade fight could only be defused if new owners for the Russian potash miner were found. The bond was issued by a special purpose vehicle owned by Uralkali’s primary shareholder Suleiman Kerimov and his two partners. By converting it to shares, the China Investment Corp.–through its Chengdong Investment Corp. subsidiary–transfers ownership of a sizeable stake of the company out of the Russian partners’ hands.

In addition, Mr. Kerimov is in talks to sell the 21.75 per cent stake he owns through his foundation, and his partners are eager to sell their smaller stakes as well, people close to them say. Together the three men control just over a third of the company. People familiar with the situation say potential buyers include several Russian tycoons, but that there is also interest from investment groups in other Asian countries.

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India seeks potash bargain after Belarus-China deal – by Rajendra Jadhav (Reuters U.S. – April 1, 2015)

http://www.reuters.com/

MUMBAI- (Reuters) – Belarus’ deal to sell potash to China at a lower-than-expected price has prompted India to seek a similar bargain ahead of the signing of new contracts this month, a move that could hit spot rates already under pressure due to stiff competition.

Belarusian Potash Company (BPC) last month agreed to raise the price of potash exports to China, the biggest consumer and which sets the benchmark, by $10 to $315 per tonne, undercutting Russian and North American rivals who were negotiating for a hike of $25-$30.

India, which imports all its potash needs, bought the crop nutrient at $322 per tonne on a cost and freight basis last year, the lowest level in seven years. It is seeking to keep the price at the same level this year.

India usually pays slightly more than China due to additional freight and as it buys in small consignments.

“The Chinese deal has highlighted the oversupply in the market,” said P.S. Gahlaut, managing director of state-run Indian Potash Ltd, the country’s biggest importer. “As far as India is concerned we cannot afford a price rise.”

Officials from Russia’s Uralkali, the world’s largest producer, are expected in India in the third week of April and any supply agreement around last year’s price will put pressure on spot prices that collapsed after Uralkali broke away from a joint trading venture with BPC in 2013.

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Allana Potash Corp agrees to $137-million takeover bid from Israel Chemicals – by Peter Koven (National Post – March 28, 2015)

The National Post is Canada’s second largest national paper.

Allana Potash Corp. agreed to a $137-million takeover bid from Israel Chemicals Ltd. because its chief executive said there was no other way to avoid massive dilution of shareholders.

Toronto-based Allana is in the same position as many other junior mining firms: it has a great project but no easy way to finance it in the current rough market conditions. The company’s Danakil project in Ethiopia is expected to cost US$642 million; by comparison, Allana had less than $8 million on its balance sheet at the end of January.

“Even if we could raise half of the money through debt, which is uncertain, we would still have to raise substantial amounts through equity,” Allana CEO Farhad Abasov said in an interview. “And that equity would come at a substantial discount to the current price.”

Allana did have options apart from an outright takeover. According to a source, the company was in negotiations to sell a large stake in itself to a state-owned Chinese construction firm that could finance the project. The source said the premium was very significant. But Mr. Abasov argued the Chinese option would be punitive for shareholders.

“It would be close to 100%, if not more, dilution for shareholders,” he said.

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Brad Wall’s good potash play – by Jack M. Mintz (National Post – March 24, 2015)

The National Post is Canada’s second largest national paper.

Premier Brad Wall of Saskatchewan is now under fire for his 2015 Budget that promises a potash tax review as well as a curb on some investment incentives for the potash industry. Some are calling his bold move a “Stelmach” moment, comparing the ever-popular Saskatchewan Party’s premier to Premier Ed’s royalty review for the Alberta’s oil and gas industry in 2007-8.

‎Saskatchewan’s royalty review is far from being a comparable situation to Alberta’s. Brad Wall inherited a clumsy complicated potash royalty system devised by the NDP in 2001-2 while the Alberta royalty system was relatively well designed before Stelmach started stirring the pot.

If anything, the Stelmach government was making the system worse with proposals that increased rather than reduced distortions. Moreover, Stelmach’s play was a revenue grab while Wall has finally taken a step to clean up a messy system with the promise not to raise revenues under the review. If there is any criticism to be laid, it’s that Wall should have acted sooner.

Wall now has a unique opportunity to not only reform potash taxation but also to ensure a politically stable tax system that has the right balance between competitiveness and public revenues. The major flaws in the current Saskatchewan system are threefold.

First, the system is unfair with differential treatment of potash companies depending on whether they existed before or after 2001-2. Companies after 2002 are taxed on their volumes differently than companies operating before this time.

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Potash Corp profit to take $100-million hit this year after Saskatchewan tax-rule changes – by Peter Koven (National Post – March 20, 2015)

The National Post is Canada’s second largest national paper.

Saskatchewan is preparing to review its byzantine potash royalty regime, and Premier Brad Wall thinks it is long overdue.

“Without the incentives that are overlaid on top of the royalty structure for brownfield and greenfield investment, we have the highest potash taxes on earth,” he said in an interview. “Higher than Russia.”

But in this week’s budget, Mr. Wall introduced one interim tax change that has already drawn a furious response from the world’s biggest fertilizer company.

Saskatchewan is stretching out the timing in which miners make deductions for expansions and maintenance spending. That has a significant impact on Potash Corp. of Saskatchewan Inc., which is wrapping up a $6-billion expansion program in the province. Potash Corp. expects budget proposals will cut its pre-tax earnings by $75-million to $100-million this year.

“Changing the rules midstream impacts the ability of our shareholders to earn a fair return on their capital and undermines Saskatchewan’s relative competitiveness,” chief executive Jochen Tilk said in an uncharacteristically harsh statement.

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It takes chutzpah for Potash to protest new tax regime – by Sean Silcoff (Globe and Mail – March 20, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Saskatchewan is blessed with the world’s largest bounty of potash – and cursed with the worst tax system for capitalizing on its bounty of the naturally-occurring fertilizer. It is a regime so complex that nobody – miners, investors or governments – has a clue how to forecast the tax outlay from year to year. Even University of Calgary tax expert Jack Mintz, who has written extensively about it, calls the regime “the most complicated thing I’ve seen in my whole career.”

Finally, after much prodding, the government of Brad Wall is promising to do something. In the provincial budget tabled this week, the Premier promised “a broad review of the entire potash tax regime.” Change can’t come soon enough. Potash Corp. of Saskatchewan, the industry’s largest miner, isn’t happy, but it has a lot of nerve to complain.

Saskatchewan’s potash tax system, according to a recent paper co-written by Dr Mintz, is convoluted, inefficient and uncompetitive. There are three levels of levies, creating a “tax jungle” that leaves producers subject to marginal effective tax and royalty rates last year ranging from 0.3 per cent to 22.6 per cent. It’s a wild and ridiculous range, especially considering the rate in other potash-producing countries amounts to one number, usually in the mid-teens or low 20s.

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COMMENT: Quebec okays controversial Arnaud apatite [phosphate rock] mine – by Marilyn Scales (Canadian Mining Journal – March 19, 2015)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

One of the hottest topics debated by residents of the town of Sept-Isles, QC, lately has been the fate of the proposed Arnaud open pit apatite mine. The project is owned by Invstissement Quebec and Yara International, a Norwegian fertilizer manufacturer.

Not surprisingly many residents of the North Shore town are wildly opposed to a large open pit on the edge of town. Even the Bureau d’audiences publicques sur l’environement (BAPE) said the project was “unacceptable” in its present form last year. The bureau cited the risk of water contamination and landslides.

Union members and the potential pool of workers for the project insist it must go ahead if the region is to have any economic hope. The Arnaud mine would create perhaps 330 jobs over its 30 year life, and it would be a welcome step toward diversifying the local economy.

Then on Monday, March 16, 2015, Quebec environment minister David Heurtel gave the project the province’s blessing. He said the operator has agreed to 11 conditions spelled out by BAPE to lessen the impact of the mine. And the new development is in line with the province’s Plan Nord.

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REFILE-UPDATE 2-Saskatchewan sees slim 2015-16 surplus, hikes potash taxes – by Rod Nickel (Reuters India – March 19, 2015)

http://in.reuters.com/

(Reuters) – The Western Canadian province of Saskatchewan expects to post a slim budget surplus in the 2015-16 fiscal year, helped by changes in how it taxes potash mining companies, the government said on Wednesday.

Premier Brad Wall’s right-leaning Saskatchewan Party government raised spending 1.2 percent to C$14.17 billion ($11.10 billion) for the year starting April 1, leaving a forecast C$107 million surplus in Canada’s biggest wheat-producing province.

Saskatchewan has remained in the black for two decades, even as most provinces ran deficits when their economies slowed in recent years. In the year ahead, however, the province expects to receive C$661 million less revenue from the crude oil industry than budgeted last year due to plunging prices.

Saskatchewan estimates the price of West Texas Intermediate oil to average $57.15 per barrel in 2015-16, while oil production slips nearly 5 percent to 178.7 million barrels.

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Budget upsets potash producers – by Bruce Johnstone (Regina Leader-Post – March 19, 2015)

http://www.thestarphoenix.com/index.html

Sask. to gain, industry to lose

A change in the province’s potash royalty regime in the 2015-16 budget will net the Sask. Party government $150 million this year, Finance Minister Ken Krawetz announced Wednesday. The government also promised to revamp the province’s complex potash royalty scheme in consultation with the industry over the next year or two.

But the province’s biggest potash producer indicated the royalty change will negatively affect earnings and amounts to “changing the rules midstream.’ The budget said changes will be made to the Potash Production Tax “to defer the timing of capital deductions in order to prove an immediate and temporary increase in revenue from potash companies. The total amount of deductions producers received from their capital spending will now be utilized over a longer period of time.

“This is an interim step that will be followed by a review of the entire potash royalty and taxation regime.’ Krawetz told reporters that the government has held “ongoing consultations with the potash industry’ about the impact of the changes.

“After these smaller changes that we’ve been working on for a number of months, there will be a broader review over the next year or two. We want to ensure that the people of Saskatchewan who own the resource are rewarded at an appreciative rate,’ Krawetz said.

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