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Saskatchewan Mining

K+S Said to Reject $8.6 Billion Takeover Bid by Potash Corp. – by Aaron Kirchfeld, Andrew Marc Noel and Sheenagh Matthews (Bloomberg News – July 2, 2015)

http://www.bloomberg.com/

K+S AG, the German potash supplier, plans to reject an $8.6 billion-plus takeover offer from Canadian fertilizer producer Potash Corp. of Saskatchewan Inc. because it deems the bid to be too low, according to people familiar with the matter.

The German company is preparing to announce its opposition to the bid as early as today, said the people, who asked not to be identified because the matter is private. A representative for K+S declined to comment.

Potash Corp. plans to analyze K+S’s response and reasoning before deciding on its next move, according to two people familiar with the matter. The Canadian firm still sees the industrial logic for the deal and an opportunity to reach an agreement, they said.

Saskatoon, Saskatchewan-based Potash Corp. said on June 25 that it made a “friendly” takeover bid. The proposed price was more than 40 euros a share, people familiar with the matter said at the time, prompting shares of Kassel-based K+S AG to gain as much as 39 percent. Today, the stock dropped as much as 2.3 percent.

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Potash Corp tussle could be win for BHP – by Amanda Saunders (Australian Financial Review – June 29, 2015)

http://www.afr.com/

A takeover tussle between two of the world’s biggest potash players could have an unlikely winner: BHP Billiton.

Analysts say a deal between Canada’s Potash Corp and Germany’s K+S will mean the remaining players in the market have increased pricing power over the next decade.

BHP has its foot on a potash megaproject called Jansen in Canada, which CEO Andrew Mackenzie has said is the best potash asset in the world.

But BHP is yet to decide whether to develop it could hinge the success of exploration and acquisitions in its other two key growth commodities: oil and copper.

Mr Mackenzie told The Australian Financial Review this month that BHP may have to choose between copper, potash and conventional oil in about five years, and could take on partners or exit one of the plays to protect its progressive dividend.

Deutsche mining analyst Paul Young said a Potash Corp deal with K+S would probably be positive for BHP.

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K+S shares surge after Potash Corp takeover approach – by Arno Schuetze and Ludwig Burger (Reuters Canada – June 26, 2015)

http://ca.reuters.com/

RANKFURT (Reuters) – Shares in German potash miner K+S SDFGn.DE leapt almost 40 percent on Friday after a takeover proposal from Canada’s Potash Corp POT.TO which sources close to the matter said was worth more than 7 billion euros ($7.8 billion).

K+S, which would become the first German blue-chip firm in a decade to be bought by a foreign company, said it was assessing its options after announcing the approach late Thursday. Two sources close to the matter said K+S would likely reject the proposal as too low.

K+S believes Potash Corp wants to take capacity out of an over-supplied market to boost its profitability, the sources said, adding the Canadian firm might also look to close some of K+S’s high cost German mines and sell its salt business.

Potash Corp is currently operating well below full capacity because of weak potash prices.

The sources said Potash Corp proposed to pay just over 40 euros a share, a 38 percent premium to K+S’s closing price on Thursday and 44 percent above the six-month moving average price, according to Thomson Reuters data.

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Canada’s Potash approaches German rival – by James Wilson (Financial Times – June 25, 2015)

http://www.ft.com/intl/companies/mining

London – The world’s largest potash producer has approached a rival about a possible takeover worth at least $7bn, a step that would be one of the largest transactions in the mining industry during the commodity price downturn of recent years.

PotashCorp of Saskatchewan, the Canadian miner of the fertiliser ingredient, said it had made a friendly “private proposal” to K+S, a German producer of the same commodity.

K+S was currently assessing its options after being told by PotashCorp of a possible takeover offer, the German company said in a statement. A PotashCorp statement said: “There is no certainty that any offer will ultimately be made or as to the terms on which such an offer might be made.”

Shares in K+S rose more than 30 per cent to €37.38. Shares in PotashCorp rose 4.3 per cent in Toronto to C$39.33. News of the approach was first reported by Handelsblatt.

Potash is a key ingredient in fertilisers and the market has been in a state of flux since 2013, when a Russian and a Byelorussian producer broke a longstanding partnership agreement that was aimed at supporting prices rather than a specific level of output.

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Vale may sell potash assets in Saskatchewan – by Rachelle Younglai and Niall McGee (Globe and Mail – May 28, 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.

As Brazil’s Vale SA figures out what to do with its fertilizer business, the mining giant is thought to be testing the waters on a potential sale, according to people familiar with the matter.

In addition to potash mines in South America, the Brazilian mining company owns a big potash development project and slew of fertilizer concessions in Saskatchewan, the world’s biggest producer of potash – a crop nutrient.

“There has been a lot of chatter that Vale is possibly considering selling their fertilizer business. If you are preparing your assets for sale, you want to increase the value of your portfolio,” said Joel Jackson, an analyst with Bank of Montreal.

Vale, the world’s biggest iron ore supplier and a major producer of other metals, is under pressure to sell assets amid a nearly $20-billion (U.S.) expansion of its iron ore complex in Brazil. People familiar with the matter said it has been trying to gauge how much its fertilizer business could fetch.

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[Saskatchewan] Expansion project will make K3 world’s largest potash mine – by Bruce Johnstone (Regina Leader-Post – May 27, 2015)

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

REGINA — Mosaic Potash’s recently announced $1.7-billion expansion project at its K3 potash mine at Esterhazy will increase production capacity from three million tons to 21 million tons by 2024, according to Lawrence Berthelet, director of capital expansion for Mosaic Potash.

“(This project) will make K3 the largest, most competitive potash mine in the world,” Berthelet said Tuesday at a Saskatchewan Mining Week presentation in Regina.

Following his presentation, Berthelet said “the expanded project will allow us to … expand capacity to give us more miners at the (mine) face and more infrastructure to deliver more tons. It allows us … to maximize the capacity of that K3 facility.’’

Begun in 2009 at a cost $1.5 billion, K3 was designed to be expanded through several stages. In March, Mosaic announced that the expansion project would go ahead, bringing total investment at the K3 site to $3.2 billion.

The expansion project will create more than 300 construction jobs a year — 600 at peak construction — during the eight-year development period.

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Saskatchewan Mining Association celebrates 50 years of mining – by Bruce Johnston (Saskatoon StarPhoenix – May 26, 2015)

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

Sask. offers ‘fertile ground’

Saskatchewan is considered one of the world’s most attractive places for a mining company to invest, with $7.3 billion worth of mineral production in 2014, world-class resources and a political climate that supports and encourages investment.

In fact, Saskatchewan ranked No. 1 in Canada and No. 2 in the world among jurisdictions that are attractive to mining investment, according to the Fraser Institute’s 2014 survey of executives of 4,200 global mining companies.

But that wasn’t always the case, as the sometimesrocky 50-year history of the Saskatchewan Mining Association shows. Even today industry and government don’t see eye-to-eye on everything, as evidenced by the SMA’s chilly response to the provincial budget’s deferral of capital cost deductions, which will cost potash producers $150 million this year.

As Neil McMillan, president of the SMA, noted there’s a fine balance between ensuring that shareholders get a reasonable return on their investment and the citizens get a reasonable return on their resource.

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[Potash Mineral] Products ‘feed and fuel the world’ (Saskatoon StarPhoenix – May 22, 2015)

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

Pamela Schwann, executive director of the Saskatchewan Mining Association, answered a few questions from Paul Sinkewicz during the seventh annual Mining Supply Chain Forum held April 14 and 15 in Saskatoon

Q How important is mining to Saskatchewan’s economy?

A Mining is one of Saskatchewan’s key economic engines of growth, directly contributing approximately seven per cent of our GDP. When you also include the related service sector industry that supplies to the mining sector, that number adds up into the double digits.

Q What role does mining play in the lives of Saskatchewan residents?

A On the surface, this is what you see: There are over 25 different mining operations in Saskatchewan spread out across the province from the coal mines along the U.S. border to the potash deposits that stretch across the south central part of the province to the uranium and gold mines in the northern part of Saskatchewan.

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[Mining] Education, research help create success – by Brian Burton (Saskatoon Phoenix – May 20, 2015)

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

Alberta couldn’t do it — but Saskatchewan did. Today it’s home to the world’s first carbon capture and storage (CCS) operation at a coal-fired power plant.

Alberta approved three coal-based CCS projects and saw proponents back away from all of them. Meanwhile, SaskPower completed its $1.5-billion CCS unit at the Boundary Dam coal-fired power plant in 2014 and now captures 1.2 million tonnes of carbon dioxide a year, equivalent to removing 250,000 cars from the road. Captured carbon dioxide is mostly injected into Weyburn and Midale oil reservoirs; earning a revenue on CCS, boosting oil production, prolonging oilfield life and raising provincial crude royalties.

While some jurisdictions, notably Ontario, have turned their backs on carbon-heavy coal, Saskatchewan is making the technical and environmental case for continued use of a resource that provides about 70 per cent of its electric power.

“It enables the continuation of coal use in the generation of electric power,” says David Grier, chief strategist with Innovation Saskatchewan. Without CCS, he says, new carbon dioxide limits could have spelled the end of coal mining in the province.

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UPDATE 1-Potash Corp evaluating SQM, ICL stakes; other holdings ‘strategic’ – by Rod Nickel (Reuters U.S. – May 21, 2015)

http://www.reuters.com/

May 21 (Reuters) – Potash Corporation of Saskatchewan Inc Chief Executive Jochen Tilk said on Thursday that he views the company’s stakes in fertilizer companies Sinofert Holdings and Arab Potash Company as “strategic,” but continues to review whether to keep its shares in ICL and SQM.

Tilk, speaking at a BMO investor conference in New York, said if Potash Corp could not build on its SQM and ICL minority stakes, it will consider whether it should keep them.

Potash Corp has control over how Jordan’s Arab Potash Company markets its potash, and Tilk said the Sinofert stake gives Potash a window into the Chinese market. But the company does not have as much influence as it wants over SQM and ICL.

Tilk said in an interview that he has not spoken with Israeli Prime Minister Benjamin Netanyahu about whether he would permit a foreign company to take control of ICL, in which the government holds a golden share.

Potash Corp tried under former Chief Executive Bill Doyle to gain a majority stake in ICL, but ran into strong opposition and backed off in 2013.

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[Saskatchewan mining sector] Reaching out to aboriginals – by Joel Schlesinger (Saskatoon StarPhoenix – May 22, 2015)

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

Lyle Acoose grew up on Ochapowace Cree Nation never realizing PotashCorp operated a major mine only 45 minutes away from his community in southeast Saskatchewan.

That is until he actually began work with the firm a few years back.

“I knew there was a mine in Rocanville, and I played hockey against kids from the community when I was younger, but until I got a summer job I didn’t really know anything about PotashCorp or its impact on the communities in which it operates,” says the human resources specialist with the Saskatoon-based multinational mining firm, the largest producer of potash in the world.

“At the time I didn’t know anybody from my community who worked for the mine, but that certainly has changed.”

Today the company of more than 5,000 employees – mostly in Saskatchewan – pays much more attention to ensuring it has a high profile in the province’s aboriginal communities. And that includes a formalized ambassador program among its First Nation and Métis employees to get out the message that there’s a bright future in the province’s mining industry.

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What you need to know: Some facts about mineral production in Saskatchewan, provided by the Saskatchewan Mining Association (Saskatoon StarPhoenix – May 21, 2015)

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

1 High-quality, economically mineable deposits of both potash and uranium are currently produced in relatively few jurisdictions in the world. Canada, Russia and Belarus together account for just over two-thirds of global potash production, and Kazakhstan, Canada and Australia produce twothirds of the world’s uranium.

2 Saskatchewan has the largest high-grade reserves in the world for potash and uranium.

3 The province boasts almost half of world potash reserves and eight per cent of known recoverable uranium reserves.

4 Canada’s mineral production was valued at $44 billion in 2013. Potash, coal and iron ore were the leading commodities by value of production.

5 Saskatchewan was Canada’s third-leading mining jurisdiction in 2013, with mineral production valued at $7.2 billion.

6 Potash was Canada’s leading mineral by value of mineral production in 2013 at $6.1 billion.

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[Diamonds in Saskatchewan] New Frontiers: ‘Looking far into the future’ – by Joel Schlesinger (Saskatoon StarPhoenix – May 21, 2015)

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

Saskatchewan is a diamond in the rough — literally. The province has long been a global player in uranium and potash mining. And diamond mining might someday be added to the list.

In fact, the province has experienced a bit of a ‘diamond rush’ in the northeast thanks to a promising find near La Ronge, called the Pikoo Diamond Project.

“The samples are some of the best ever found in Canada; even better than the Point Lake discovery that launched the country’s diamond mining industry,” says Nick Thomas, with North Arrow Minerals, an exploration firm with the largest stake in the area.

“The Achilles heel is the size of the discovery — it’s smaller than others in Canada, but we’re still learning about it, and it did add a lot of excitement at a bleak time in the exploration sector.” Already many very junior exploration firms are staking claims around North Arrow’s find, hoping to discover more deposits.

The heightened diamond activity comes at a time when exploration spending across Canada is down significantly from previous years. In 2011, according to data released by Natural Resources Canada (NRC), firms spent $4.2 billion in Canada on exploration.

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Population growth bodes well for potash – by Paul Sinkewicz (Saskatoon StarPhoenix – May 20, 2015)

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

Saskatchewan potash producers have two billion reasons to feel secure.

They don’t have to worry too much about the spot price of the fertilizer ingredient in 2015, or the outcome of the recently announced provincial royalty review, or even the machinations of competitors flooding the market with product to grab market share.

Those two billion reasons represent the expected increase in world population in the next 35 years, so the major expansions underway at Saskatchewan potash mines appear to be safe bets, according to industry representatives.

“Food security is a defining issue of our time; and for the next century, demand for food will only accelerate,” says Walt Precourt, senior vice-president of potash for The Mosaic Company.

Precourt noted those two billion new mouths to feed are equivalent to the entire world population in 1940. Today there are seven billion people on Earth, with some forecasts putting the population at more than 10 billion in 2050.

“The investments we have made in expanding our potash operations in Saskatchewan will ensure we have the capacity to meet the demand for potash and help the world grow the food it needs,” says Precourt.

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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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