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Saskatchewan Mining

A tale of two minerals: Overproduction, low demand, weak prices dog potash, uranium mining – by Bruce Johnstone (Regina Leader-Post – May 27, 2016)

http://thestarphoenix.com/

With apologies to Charles Dickens, it was the best of times and worst of times for Saskatchewan’s mining industry in 2015.

Both production volume and value of Saskatchewan’s most important mineral resources — potash and uranium — were up in 2015 over 2014. And, for the first time ever, Saskatchewan was ranked second in terms of the value of mineral production among Canada’s mining provinces last year.

But by the fourth quarter of 2015 and first quarter of 2016, overproduction and low prices resulted in potash and uranium mine shutdowns and layoffs.According to Natural Resources Canada, the value of Saskatchewan’s mineral production was $8.5 billion in 2015, with a nearly 20 per cent share of Canadian mineral production.

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Newfoundland’s Sisters of Mercy challenge Potash Corp in board room – by Michael Swan (The Catholic Register – May 25, 2016)

http://www.catholicregister.org/

The Sisters of Mercy of Newfoundland lost a vote at the May 11 Annual General Meeting of Potash Corporation of Saskatchewan, Inc., but they won attention from the mining giant’s management.

The community of 95 Catholic sisters were asking the company, currently valued at $14.7 billion on the Toronto Stock Exchange, to undertake a human rights study of its operations in the Western Sahara. The proposal garnered just 6.7 per cent of the votes at the 2015 AGM, but it attracted support from 31.6 per cent of the outstanding shares — including the votes of major institutional investors this year.

The sisters’ motion was backed by the British Columbia Investment Management Corporation, which handles pension funds for BC public servants, the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan among others — totalling 159,593,972 shares voting for the motion, versus 344,850,348 shares against.

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Potash Corp sees Chinese supply contract settling within weeks – by Rod Nickel (Reuters U.S. – May 19, 2016)

http://www.reuters.com/

NEW YORK – May 19 Potash supply contracts with Chinese buyers should be settled in two to four weeks, the chief executive of Potash Corp of Saskatchewan said on Thursday, setting a badly needed global price floor for the slumping crop nutrient.

Potash prices have fallen to their lowest in a decade, weakened by declining U.S. farmer incomes, falling currencies in consuming markets such as Brazil and bloated mining capacity. The Chinese contract usually sets a floor for a subsequent contract with Indian buyers and spot prices for Brazil and the United States.

Chief Executive Jochen Tilk was speaking at a BMO investor conference in New York. Afterward, he told Reuters he expected Chinese buyers to settle first with Belaruskali and Russia’s Uralkali, as is typical.

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De Beers eyes diamond exploration in northern Saskatchewan – by Alex MacPherson (Saskatoon StarPhoenix – May 19, 2016)

http://thestarphoenix.com/

The world’s largest diamond mining company has entered into a multi-million-dollar agreement to look for crystallized carbon in northern Saskatchewan’s Athabasca Basin.

De Beers Canada Inc. optioned land claims south of Lake Athabasca from CanAlaska Uranium Ltd., and can now spend up to $20.4 million exploring and drilling 75 “kimberlite-style targets” identified in the 2011 Saskatchewan Geological Survey.

“We might have diamonds in Saskatchewan, and De Beers are really interested … This is an opportunity to investigate something completely new,” CanAlaska president and CEO Peter Dasler said Thursday.

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[Potash Corp. and Western Sahara] Companies need to do due diligence on human rights abroad – by Fred Pinto and Peter Chapman (Globe and Mail – May 10, 2016)

http://www.theglobeandmail.com/

The sale of Canadian military vehicles to Saudi Arabia has once again raised the age-old debate over whether Canada should do business with countries that have dubious human-rights records or in conflict-torn regions.

But it’s not just a question for governments to address. Companies also need to understand the human-rights risks they face in overseas operations and supply chains. And, increasingly, their investors do, too.

New international instruments such as the United Nations Guiding Principles on Business and Human Rights as well as new reporting requirements under securities regulations are increasingly emphasizing the need for global businesses to assess their own human-rights risks, and to take steps to ensure that they are not contributing to rights violations.

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UPDATE 4-Potash Corp cuts 2016 profit forecast, dividend seen at risk – by Rod Nickel and Arathy S Nair Reuters India – April 29, 2016)

http://in.reuters.com/

April 28 Canada’s Potash Corp of Saskatchewan , the world’s biggest fertilizer company by capacity, cut its full-year profit forecast on weak demand and lower prices on Thursday, raising concerns of another dividend cut.

The company in January cut its dividend by 34 percent to $1 on an annual basis as potash prices plunged due to overcapacity and weak currencies in major consumers such as India and Brazil. BMO analyst Joel Jackson said Potash may need to cut the dividend further as it represents 143 percent of its estimated profit this year.

U.S.-listed shares of Potash fell 3 percent to $17.61 after the company posted an 80 percent plunge in first-quarter profit. Potash is monitoring its dividend level, but an adjustment would be premature until the company better understands when the market will recover, Chief Executive Jochen Tilk told analysts on a conference call to discuss earnings.

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First Nations must pursue own interests in resource projects – by Doug Cuthand (Saskatoon StarPhoenix – April 30, 2016)

http://thestarphoenix.com/

Back in the 1970s and ’80s there was opposition to developing uranium mines
in Northern Saskatchewan. Our people were used as an ally by the opponents,
but in the end the mines were developed. Northern people expressed their
concerns for the environment, but they also saw the value of employment
and business opportunities.

The uranium industry became an economic engine, creating jobs and contract
opportunities for our people. Today there are indigenous companies that
provide camp catering, trucking, security and other spinoff services.

Pipeline building is once again in the news, and the pros and the cons are lining up. Our people once again are somewhere in the middle, seen either as an ally or an impediment.

First Nations have been left out of resource development instead of being treated as stakeholders. The same people who ignore our potential also are the ones to complain about indigenous poverty and suggest that we move away from traditional communities. Meanwhile, the environmentalists and anti-developers co-opt our people as allies in order to justify their cause.

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Cameco Corp to shutter Rabbit Lake mine, cut 500 jobs due to weak uranium market – by Peter Koven (National Post – April 22, 2016)

http://business.financialpost.com/

Cameco Corp. announced it will shutter its long-running Rabbit Lake operation in Saskatchewan as the company tries to adjust to an extremely weak uranium market.

The shutdown will lead to roughly 500 job losses, Saskatoon-based Cameco said on Thursday night. The miner is also curtailing production at its U.S. operations, which will result in an additional 85 job cuts.

Cameco chief executive Tim Gitzel said these moves were unavoidable as the company needs to be prepared for a “lower-for-longer” scenario in the uranium business. “It was just a tough day for all of us here at Cameco and we’re thinking of our employees,” he said in an interview.

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Uranium market is getting crushed – by Frik Els (Mining.com – April 21, 2016)

http://www.mining.com/

Uranium price falls to lowest since May 2005 as bearishness overwhelms the sector

Iron ore is on an insane run, copper’s dug itself out of January’s seven-year trough, tin and zinc are in bull markets, coking coal is heading for triple digits and crude’s holding onto 60% gains since February’s low despite the Doha disaster.

Uranium? It’s having the worst start to a year in a decade. U3O8 is down more than 25% in 2016 with the UxC broker average price sliding to $25.69 a pound on Friday. That’s the cheapest uranium has been since May 2, 2005.

Haywood Securities in a research note points out that the spot U3O8 price “saw three years of back-to-back double-digit percentage losses from 2011-13, but none worse than what we’ve seen thus far in 2016, and at no point since Fukushima, did the average weekly spot price dip below $28 a pound.” The long term price, where most uranium business is conducted, is languishing at around $44 a pound.

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Cameco Corp. shuts down Rabbit Lake uranium mine indefinitely and cuts 500 jobs (Saskatoon StarPhoenix – April 21, 2016)

http://thestarphoenix.com/

Cameco Corp. is shuttering its Rabbit Lake uranium mine in northern Saskatchewan and curtailing production at its U.S. operations, resulting in the loss of about 585 jobs.

“Unfortunately, continued depressed market conditions do not support the operating and capital costs needed to sustain production at Rabbit Lake and the US operations,” Cameco CEO Tim Gitzel said in a statement late Thursday afternoon.

Rabbit Lake, which began production in 1975, will be placed in a “safe care and maintenance state” until market conditions improve “significantly.” The move will result in a reduction of about 500 jobs at the operation.

Layoffs will take place over the next four months, with affected employees being offered severance packages or alternatives such as relocation to other Cameco operations or job sharing options, the company said in a news release.

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Delays in Chinese potash deals underscores industry troubles – by Ian McGugan (Globe and Mail – April 13, 2016)

http://www.theglobeandmail.com/

The most important thing happening in the potash industry right now is what is not happening. Producers from Canada, Russia and Belarus have yet to sign 2016 contracts with Chinese importers. The price China pays for potash is considered a key benchmark for the commodity and deals in past years have often been concluded in January, setting the tone for the year ahead.

Last year, when negotiations dragged into March, it was considered a worrisome portent for potash producers. This year’s even longer delay underscores the growing strains on the industry. Swelling supply of the crop nutrient and slumping demand continue to drag down spot prices, while ample customer inventories provide little reason for Chinese buyers to rush into a contract.

In a report entitled “It just feels like another leg down is coming,” Joel Jackson of BMO Capital Markets predicted this week that Chinese contracts will settle around $240 (U.S.) a tonne, a steep fall from $315 a tonne last year.

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Canadian firms dominate phosphate imports from Western Sahara: report – by Peter Koven (Financial Post – April 8, 2016)

http://business.financialpost.com/

Two Canadian fertilizer firms have become the dominant buyers of phosphate rock from the disputed territory of Western Sahara after other companies stopped the practice, according to a report.

The study, released Friday by Western Sahara Resource Watch (WSRW), found that Potash Corp. of Saskatchewan Inc. and Agrium Inc. shipped a combined 916,000 tonnes of phosphate from the territory last year. That accounted for 64.5 per cent of all purchases from Western Sahara in 2015. Potash Corp. shipped 474,000 tonnes and Agrium shipped 442,000, the report said.

“Agrium and Potash Corp. are by far the biggest importers,” Erik Hagen, a WSRW board member, said in an interview. These shipments are controversial because of Western Sahara’s unique status. It is the last remaining colony in Africa, but is under the de facto control of Morocco, which claimed sovereignty over the area after Spain withdrew in 1975.

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How Saskatchewan remade uranium mining – by Vladimir Basov (Mining.com – March 31, 2016)

http://www.mining.com/

String of high-grade high-tonnage discoveries reestablishes Canadian province as the world’s richest uranium jurisdiction

It’s a fact that new high-grade high-tonnage metal deposits are becoming extremely scarce, with falling grades and a lack of new world-class deposit discoveries.

While it is next to impossible to imagine, for example, discovery of a new 200g/tonne 25 million ozt gold deposit, it is just has become a routine process for one particular commodity in one particular jurisdiction.

Athabasca sedimentary basin, located mainly in Canada’s Saskatchewan province, contains both high-grade and high-tonnage unique, a.k.a “unconformity” bonanza-type uranium deposits.

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Wynyard, Sask., ‘really excited’ for new potash mine (CBC News Saskatoon – March 16, 2016)

http://www.cbc.ca/news/canada/saskatoon/

A new potash mine set to open near Wynyard, Sask., a town about 190 kilometres southeast of Saskatoon, has the community “really excited.”

“It’s great news for our community,” said Wynyard mayor Ted Czarnecki. “It’s rare that you hear much good news these days with all the uncertainty of projects out there.”

Karnalyte Resources Inc., a Saskatoon-based potash company, announced Monday that an agreement had been made with an India-based fertilizer company, Gujarat State Fertilizers and Chemicals Ltd., to finance the construction of a potash mine and a mineral mine in Wynyard.

Karnalyte founder and president Robin Phinney said this is the company’s most significant milestone, with a fully-financed deal to build the potash mine in Saskatchewan.

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India’s GSFC backstops first phase of Karnalyte’s Canada potash mine – by Rod Nickel (Reuters India – March 14, 2016)

http://in.reuters.com/

WINNIPEG, MANITOBA – India’s Gujarat State Fertilizers and Chemicals Ltd has agreed to guarantee payments on $700 million in debt to finance the first phase of Karnalyte Resources Inc’s Canadian potash mine project, Karnalyte said on Monday, adding supply even as other miners cut production. The company’s shares jumped 76 percent in Toronto to C$1.55.

Under the deal, a subsidiary of State Bank of India and other lenders would loan Saskatchewan-based Karnalyte most of the funds, with GSFC guaranteeing payments in exchange for a greater voting share. Karnalyte plans to make payments from cash flow and eventually issuing more shares.

The mine – to be located in Wynyard, Saskatchewan – would add supply to a struggling industry that has already seen production cuts by Potash Corp of Saskatchewan and others, due to weak crop prices and slack Brazilian demand.

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