Saskatchewan Mining

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Potash mines are a common sight in Saskatchewan, and most residents are well aware that the industry commands billions of dollars on the global market and is an important component of the province’s economy. Less obvious, however, are its origins and its uses, which range from the biological to the chemical.

The term “potash” refers to not one, but several potassium compounds and potassium-bearing materials that contain water-soluble potassium. It is so named for the pre-industrial practice of using large, iron pots to collect potassium evaporated from wood ash. Eventually, the term would be applied to both naturally-occurring potassium salts and the substances produced through the industrial extraction and refinement of those salts.

Potassium is a metal, and an extremely active one at that. When ignited, it burns with a purple hue and, when introduced in its pure form into the atmosphere, it reacts violently with any oxygen and water that it encounters. Its interaction with water is particularly dramatic, creating corrosive potassium hydroxide and leaving free hydrogen atoms to react with other molecules.

Stable potassium salts were infused into the soil of this province beginning roughly 544 million years ago, between the Cambrian and Mississippian periods.

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Potash is one of Saskatchewan’s -and the world’s – most important minerals and, because of this, people watch carefully when the price fluctuates. Doug Elliott, the publisher of Sask Trends Monitor explained that, as with all commodities, the price of potash is a function of supply and demand. If there is an excess of demand or a shortage of supply, the prices go up.

The reverse is true as well – if demand falls off or the supply increases, prices will fall. Unlike most other minerals, potash is sold through several groups (known as marketing agencies or cartels) that try to manage supply and demand thereby controlling the price. “These [cartels] that try to manage the price have only some success,” said Elliott.

The long-term outlook for potash is positive. “The population of the world is growing and potash is important as a fertilizer to help grow more food for the expanding population. This will increase demand and help keep the prices high,” Elliott said. In terms of the short term, Elliott expects to see the price for potash to turn downward possibly to as low as $300 per tonne by the spring. He explained this could happen because of the recent collapse of one of the marketing agencies in Russia and Belarus.

When asked about BHP Billiton and its expansion plans for Jansen Potash Project, Elliott said it demonstrates that the company has a long-term view of potash’s future.

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Potash mines 14 billion $investment in Saskatchewan

Potash has brought billions of dollars of investment to the province and is a fundamental part of the Saskatchewan economy, according to the minister responsible for energy and resources, Tourism Saskatchewan, and trade. “The current expansions at the existing potash mines have created almost $14 billion of investment in our province,” said Tim McMillan, whose portfolio falls under the ministry of the economy. “Many of those are completed, some are underway and some are still in the planning stages.”

He said the provincial government is also excited to see new mines being built for the first time in four decades. “For a lot of years, the policy choices were not conducive to development,” explained McMillan. “In fact, the CEO of K + S Potash has said they were upset for years about the way they were treated in Saskatchewan, but today they recognize our province is the best place in the world to do business. They are now investing $4 billion to develop the first new mine in Saskatchewan since the early 1970s.”

The intense focus on potash has been a welcome development for Saskatchewan, according to McMillan. “Ten years ago, potash was a sleepy commodity,” he said. “Now it is in the news on a regular basis.”

He attributes global interest to the demand for food as the world’s population continues to rise. “Countries like China and India, which have ever-increasing standards of living, want access to higher quality food,” he said.

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For decades, potash has been a linchpin of the Saskatchewan economy. From the earliest mining efforts in the 1950s and ’60s, up to the high volume trading that takes place today, a significant part of the history of mining in Saskatchewan is tied to potash production. Among the many groups working to make sure potash continues to be a part of the province’s future is the Saskatchewan Mining Association (SMA), which is concerned with representing and supporting a safe, responsible and growing Saskatchewan mining industry, and encouraging research and training within Saskatchewan. These mandates prove to be a demanding job, as Saskatchewan’s potash industry continues to grow.

Much of this development can be attributed to the wealth of potash that exists within the province. The prairie evaporate unit, which hosts the potash deposits, stretches from an area west of Saskatoon, east to Rocanville, and southward to Moose Jaw. As a result, recent estimates indicate that, at the current rate of production, Saskatchewan’s reserves will last for hundreds of years and will continue to provide a stable foundation for expansion.

Within Canada itself, Saskatchewan stands as the leading producer of potash, with over 85 per cent of the nation’s total coming from the province’s 10 operational mines. From these mines, approximately 14 million tonnes (Mt) of KCl was produced in 2012, with future expansions looking to add another five to 10 Mt of production by 2020.

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1943: Geological surveys and exploratory drilling reveals that Saskatchewan has one of the largest potash deposits in the world.

1951: First commercial production potash mine is attempted by Western Potash Corporation Limited in the Unity district. Numerous delays and flooding make the project unsuccessful.

1958: Potash is first produced by Potash Company of America (PCA) near Saskatoon. The mine floods the next year and does not return to production until 1965.

1960: 1970: Potash production in Saskatchewan has been continuous since 1962: Ten mines are built in Saskatchewan for less than $300 million by six different companies. Referenced by: company name, location (year of initial production). Potash Company of America, Saskatoon (1958); International Minerals and Chemical Corporation (IMC), Yarbo K-1 (1962); Kalium Chemicals Limited, Belle Plaine (1964);

IMC, Gerald K-2 (1967); Allan Potash Mines, Allan (1968); Duval Corporation of Canada, Saskatoon (1968); Alwinsal Potash of Canada Limited, Guernsey (1968); Central Canada Potash, Colonsay (1969); Cominco Ltd., Vanscoy (1969); Hudson Bay Mining and Smelting Co. Limited, Rocanville (1970).

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

Three years ago, when Australia’s BHP Billiton came bidding for Potash Corp. of Saskatchewan Inc., opponents of the deal had all of the arguments. A majority of the company’s shareholders may have lived outside Canada, along with its CEO, but nevertheless this was a Canadian icon, a “national champion,” or, if you really wanted to get hard-headed about it, a “strategic asset.”

Why would anyone want to sell a company that controlled 53% of the world’s potash reserves? Why, that is, other than the $130 a share —nearly $40 billion in total — that BHP was offering. But what was such a pittance if it meant pulling PotashCorp out of the Canadian-led global potash cartel, on which the vastly inflated world price of potash depended? Surely any idiot could see the folly in that. And in time, enough idiots did: The federal government, egged on by the government of Saskatchewan, blocked the sale.

At the time, blinkered ideologues like me expressed concern that, in the name of preventing one foreign-owned company from taking over another foreign-owned company, and for the sake of preserving “our” control of a resource that would remain as much owned, taxed and regulated by the province after the sale as before, PotashCorp’s shareholders — including the 49% who were Canadian — had been deprived of the capital gain they could legitimately have expected on the sale.

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