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Saskatchewan Mining

Russia’s potash breakup a ‘game-changer’ for Canadian industry – by Brenda Bouw (Globe and Mail – July 31, 2013)

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.

The dramatic breakup of the world’s largest potash oligopoly promises to reshape the industry and send prices tumbling, threatening the profit-making power of the marketing group that sells Saskatchewan potash to global customers.

Russia’s Uralkali said it is walking away from its Belarus Potash Company (BPC) joint venture with partner Belaruskali in order to sell potash on its own to hungry markets in China and India. The move is expected to shatter the industry’s supply-demand picture and spur a global potash price war.

It’s also a serious blow for Canpotex Ltd., the potash marketing group made up of Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc. The shares of all three companies were hit hard; combined, they lost nearly $9-billion in stock-market value. Potash Corp., one of Canada’s biggest mining companies, fell 16 per cent to $32.66. Analysts warn Canpotex’s pricing leverage could soon disappear, clobbering profits for each public company.

“This is a game-changer,” said John Chu, an analyst at Alta-Corp. Capital Inc.

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Saskatchewan economy can weather potash storm – by Claudia Cattaneo (National Post – July 31, 2013)

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

CALGARY – Saskatchewan will feel the impact of a global potash price war triggered by Russia, but the blow will be lessened by industry efficiencies and continuing growth in other sectors such as oil and uranium. “We remain extraordinarily bullish,” Kent Windsor-Smith, executive director of the Greater Saskatoon Chamber of Commerce, said Tuesday.

“We don’t foresee anything slowing us in 2013. We are expecting to see a modest slowdown in the growth rate in 2014, but that was probably in the cards already and it related to the fact that a number of these capital projects are winding down and moving toward completion.”

Saskatchewan’s potash sector, which produces about a third of the world’s supply of the crop nutrient, spent heavily in recent years to modernize operations and reduce costs, making it well-positioned to weather pricing pressures, he said, while “producers in other parts of the planet may not be as cost competitive.”

Meanwhile, the province’s diversified economy, which has been growing at a blistering pace, will continue to be supported by spending in oil and uranium, and a stable agriculture base.

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UPDATE 4-Potash sector rocked as Uralkali quits cartel; price slump seen – by Polina Devitt and Natalia Shurmina (Reuters India – July 30, 2013)

http://in.reuters.com/

MOSCOW, July 30 (Reuters) – Russia’s Uralkali has dismantled the world’s largest potash cartel in a move that it expects to slash prices by 25 percent, heralding a reshaped industry and pummelling shares of companies that produce the key fertiliser ingredient.

The break-up of the Belarus Potash Company (BPC), a joint venture with Belarussian partner Belaruskali, could cause a price war and leaves North America’s Canpotex as the dominant potash export venture.

It could also lead to cancellations of projects by rivals as the industry weighs the effect of lower prices, but may feed through to better deals for farmers and ultimately consumers. U.S.-listed shares of the Canpotex owners – Potash Corp of Saskatchewan, Mosaic Co and Agrium Inc – plummetted, cutting their market value by nearly $15 billion.

BPC and Canpotex had accounted for 70 percent of global trade in potash, and the duopoly had set identical prices in key markets such as China and India.

“In the last few years, BPC and Canpotex … succeeded by raising potash prices much above their production cost,” a senior official at a major Indian potash firm said, asking not to be identified because of the sensitivity of the matter.

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Vale holds open houses on EIS for potash mine – by Regina Leader Post (July 19, 2013)

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

Vale Potash Canada held open house information meetings to discuss the environmental impact statement (EIS) for its proposed Kronau potash mine in Kronau, about 30 km southeast of Regina, on Wednesday and nearby White City on Thursday.

While the Brazilian mining giant’s proposed potash solution mine project was put on hold last August, there’s still considerable interest in the $3-billion project and its potential environmental impact on the area, according to a spokesperson for Vale Potash Canada.

“What we’re trying to get across to people is that if the Kronau project proceeds … the commitments attached to the EIS still apply,” said Lara Ludwig, community relations lead for Vale Potash Canada. About 170 people attended the Kronau session, which was similar to the crowd at the first public information meetings on the Kronau project in 2011, Ludwig said.

“A lot of people had questions about how the internal option analysis is going and what the status (of the project) is. From our perspective, … it was a good opportunity to reconnect and answer any questions.”

Last August, the giant mining company decided to temporarily suspend further work on the 2.9-million tonne per year project due to the tough global economy, although work on the EIS and finding a secure water source for the mine continued.

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Canadian potash deal shows trend among Chinese – by Eddy Lok (China Daily U.S.A. – July 5, 2013)

sa.chinadaily.com.cn/index.

Chinese investment in a potash project in the Canadian province of Saskatchewan bodes well for junior mining companies in search of international financing, analysts say.

Vancouver-based Western Potash Corp, recently closed what it called was a strategic equity investment in the company by China BlueChemical Ltd and Guoxin International Investment Corporation.

Under the joint-venture deal, CBC (Canada) Holding Corp will make a strategic equity investment of $32 million in Western Potash at a price of 71 cents a share, according to a company news release.

As a result of this transaction CBC (Canada) Holding will hold a 19.9 percent ownership stake in the company on a non-diluted basis.

CBC (Canada) Holding is jointly owned by China BlueChemical Ltd and Benewood Holdings Corp Ltd. China BlueChemical is a majority-owned subsidiary of China National Offshore Oil Corporation, while Benewood is a wholly-owned subsidiary of Hong Kong registered Guoxin International Investment Corporation Limited.

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NEWS RELEASE: Saskatchewan’s mining sector expected to fuel provincial economic growth: RBC Economics

TORONTO, Jun 19, 2013, 2013 (Menafn – Canada NewsWire via COMTEX) — Strengthening mining output will drive Saskatchewan’s economy in 2013, according to the latest RBC Economics Provincial Outlook issued today. RBC forecasts provincial real GDP growth of 2.9 per cent in 2013 and 3.7 per cent in 2014.

In 2012, RBC’s forecast for provincial growth steadily lowered to 2.4 per cent as demand for potash – and in turn production – softened largely due to weak overseas demand. However, with multi-year sales agreements settled late last year and early this year with a number of key overseas purchasers, demand has started to pick up. In fact, potash production numbers for the first quarter of 2013 are pointing to an impressive 26 per cent increase over year-ago levels.

“Saskatchewan’s economy has traditionally been buffeted by swings in agricultural production, and in recent years the mining sector has been additional source of volatility,” said Craig Wright, senior vice-president and chief economist, RBC. “We expect the potash rebound to boost mining output by 4.5 per cent this year and 5.0 per cent next after growth of only 1.0 per cent in 2012.”

A sizeable snowfall last winter sparked concerns that Saskatchewan’s agricultural production would be hindered by potential spring flooding, RBC says. By the end of May, however, Saskatchewan’s government reported that 67 per cent of 2013 crops had been planted – this is only slightly below the five-year average (70 per cent) for the that time of year.

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Green light for Cigar Lake uranium mine – by Jessica Brown (Global News – June 15, 2013)

http://globalnews.ca/toronto/

SASKATOON – Canada’s Nuclear Safety Commission has given Cameco’s Cigar Lake uranium mine the green light. It’s a significant step for the Saskatoon-based mining giant after eight years constructing the $1.1 billion project.

The company says they are pleased to have finally cleared the last hurdle. “This allows us to move from a construction phase to a production phase and that’s a significant step for Cameco, also the fact that it’s a sign of confidence from our regulator is very encouraging,” said Rob Gereghty, a spokesperson for Cameco.

After construction kicked off in 2005 the mine was struck by inflow in 2006 and again in 2008. “The geology is probably the most significant challenge we face at Cigar Lake, being mindful of water and inflows, but we believe we have that well under control,” said Gereghty.

Premier Brad Wall welcomed the announcement. “Cameco is a big part of our economy and this particular mine will be very, very significant. I think the increased production capacity is good for jobs and it’s good overall for Saskatchewan’s position in the world,” said Wall.

Jet boring for ore is due to start up this summer with 300,000 pounds of uranium expected to be produced by the end of 2013. That number will be ramped up to 8.2 million pounds by 2017, while creating 250 new jobs.

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City sees big things in it’s future – Regina Leader Post Editorial (June 12, 2013)

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

The city councils of Saskatchewan’s two biggest cities are dreaming some pretty ambitious future population numbers these days – Saskatoon is eyeing expansion to over a million people while Regina is planning for 500,000.

Born of optimism from the continuing economic boom and rosy forecasts of long-term provincial economic growth fueled by natural resources and a resurgent agriculture sector, planners see the day when Regina and Saskatoon will be well over double their current size. In Regina’s case, that means annexing land on all sides of the city from the RM of Sherwood to accommodate expansion.

Are these projections realistic or just wishful thinking? Well, history does offer plenty of evidence for caution when it comes to population growth in this province.

Indeed, before the current economic boom began fuelling strong population growth less than 10 years ago, skeptics could point to the fact that Saskatchewan had a bigger population in the 1930s than in the 1970s. For example, the provincial population of 921,323 in 1976 was lower than that of 1936, when 931,547 people called the province home. And even though the province briefly surpassed the one-million mark in the 1980s, a stagnant economy and outmigration subsequently took the number down to 978,933 by 2001.

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Saskatchewan will need $20-$30B a year in capital – by Bruce Johnstone (Regina Leader Post – June 12, 2013)

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

Saskatchewan will need to attract $20 billion to $30 billion in capital investment annually for the next 20 years to finance its rapid economic and infrastructure growth, according to a Conference Board of Canada report.

How well the province manages this unprecedented demand for capital will largely determine whether or not Saskatchewan achieves its maximum growth potential, said the study, entitled Green Machine: Financing Growth in the New Saskatchewan.

About $38 billion in capital projects are currently underway, largely financed by multinational, out-of-province companies, with mining projects accounting for about 40 per cent of the work. But the province will require capital investment of $20 billion to $30 billion a year over the next two decades (2013 to 2032), to keep up with demand for oil and gas, mining and public infrastructure spending.

“This is not another commodity cycle. The force driving higher returns to crops and potash are real and long term,” the study said, noting that global population is expected to grow by 36 per cent by 2050, which will require another 945 million tonnes of cereal grains and 200 million tonnes of meat.

In addition to the capital demands of extractive industries, like oil and gas and mining, demand for public infrastructure, like roads, water and sewage treatment facilities, will also increase as the population grows to 1.4 million by 2035, the study said.

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[Saskatchewan potash] Bethune Mine: Promises Lasting Legacy – by Ella McIntyre (Saskatoon StarPhoenix – June 11, 2013)

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

A promise of economic growth and employment, with an eye to ensuring long-lasting environmental and community well-being, is behind K + S Potash Canada’s $3.25 billion dollar solution mining Legacy Project planned for the Rural Municipality (RM) of Dufferin, near the village of Bethune. Bethune is approximately 50 kilometres from Regina.

“Not only is the Legacy Project Saskatchewan’s first potash mine in nearly 40 years, it is one of the world’s most economically attractive greenfield projects,” said Christine Stass, spokesperson for K+S Potash Canada and its parent K+S Group, a leading supplier of fertilizers and the world’s leading salt producer.

As Stass explains, with a potash price of between USD 400 and 450/tonne, the project achieves a Return on Capital Employed of 12 per cent and an attractive premium on K+S Group’s costs of capital. It also promotes important jobs and economic opportunities for Saskatchewan. By spring 2013, 200 to 300 people will be working on site which, at its peak, will provide over 1,100 jobs and roughly 6 million employment hours. The following two years will see rail construction, structures built and equipment installed and, by late 2015, plant commissioning and the site near completion. Once in full production, the mine will employ 320 permanent workers, with more jobs created through ongoing contract employment.

Potash production for the mine is anticipated for 2015. The operation will ramp up to full capacity of 2.86 million tonnes by 2023. With further expansion, production could increase up to 4 million tonnes per year.

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RPT-BHP entry threatens creaking global potash duopoly – by Ron Bousso and Polina Devitt (Reuters U.K. – June 10, 2013)

http://uk.reuters.com/

(Reuters) – The prospect of new competition from miner BHP Billiton could dynamite the cracks appearing in a potash duopoly that accounts for 70 percent of global trade in the fertiliser.

For decades two export groups, Belarus Potash Company (BPC), which represents producers in Russia and Belarus, and Canpotex, its North American equivalent, have set identical prices in key markets such as China and India and have often curbed output simultaneously.

That choreography, which smaller players also dance in step with, is already under fire; four producers in the groups – BPC’s Uralkali, and Canpotex’s three members Potash Corp of Saskatchewan, Agrium and Mosaic – recently agreed to pay over $100 million to settle a U.S. antitrust lawsuit accusing them of concerted action to raise prices.

Canpotex and BPC did not respond to a request for comment for this story, but the producers have denied the accusations, and Uralkali said “potash producers and traders do not agree with each other on prices and pursue their own pricing policies”. Their footwork has also faltered under the strain of falling prices in recent months, and the music could stop altogether if BHP goes ahead with the 8 million tonne per year Jansen mine in western Canada, which would be the world’s largest potash mine if it opens as scheduled in 2017.

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Allana in Ethiopia Snubs Potash Supply Concern: Corporate Canada – by Christopher Donville (Bloomberg News – June 10, 2013)

http://www.businessweek.com/

Allana Potash Corp. (AAA), the Canadian developer of a $642 million potash mine in Ethiopia, says predictions of a global oversupply of the crop nutrient are overblown because competing projects are being put on hold.

World potash production capacity will rise 38 percent to 96.5 million metric tons by 2017, while demand will increase 26 percent to 66 million tons, according to Green Markets, a fertilizer industry information provider.

Supply forecasts include mines that aren’t yet in production and may be shelved or canceled because of rising construction costs, said Farhad Abasov, Toronto-based Allana’s chief executive officer.

“On paper it seems like there is quite a bit of supply coming on line,” Abasov said in a May 28 telephone interview from London. “In reality only a handful of them will hit production.”

Soaring expenses are beginning to exact a toll on proposed potash mines around the world. Vale SA, the third-largest mining company, in March suspended its Rio Colorado project in Argentina after the estimated cost almost doubled to about $11 billion.

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Mine rescue workers test their skills – by Jason Warick (Saskatoon StarPhoenix – June 3, 2013)

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

Fred Anderson didn’t hesitate when called to the scene of a fire at the Patience Lake potash mine near Saskatoon. “Your training just kicks in,” Anderson said of the incident last month.

Fellow rescue worker Rob Burford said he wondered at first if it was yet another practice drill. “When we saw the smoke, we knew. The adrenalin got going,” Burford said.

A series of pipes on the top floor of a building was on fire. Before rushing in, the Potash Corporation of Saskatchewan workers donned their safety gear and assessed the situation. Only then did several of them enter the building and extinguish the fire. The damage was contained and no one was hurt.

“We practise a lot. It’s a big focus to ensure we’re ready for real-life situations,” Anderson said. Anderson, Burford and the other five members of the Patience Lake team got to practise even more over the weekend at the Saskatchewan Mining Association’s mine rescue skills competition at Prairieland Park. Teams of mine workers from across the province put out fires, rescued car accident victims and figured out how to survive encounters with poisonous gas in simulated drills. There was also an extensive written safety exam.

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Impacts of climate change on mining industry studied – by Sheila Bautz (Regina Leader Post – May 25, 2013)

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

For L-P Specialty Products

Natural Resources Canada is funding a project to examine the impacts of climate change on mining in Saskatchewan. The goal is to distribute the results of the project’s recommendation documents across Canada by compiling the information in a program called “Enhancing Competitiveness in a Changing Climate.”

The federal government is funding the Saskatchewan project entitled, “Risk To Mining Companies Related to Extreme Climate Events: Case Studies of Adaptation Actions Focusing On The Qu’Appelle Water Sheds” for inclusion with their program.

Although federally funded, the Water Security Agency (previously Saskatchewan Watershed Authority) is leading the provincial project. The Water Security Agency leads management of the province’s water resources to ensure safe drinking water sources and reliable water supplies for economic, environmental, and social benefits for the people of Saskatchewan. Ben Brodie has been contracted as the project manager by The Water Security Agency to deliver the project. Brodie is managing the extensive research team undertaking various areas of research and documenting case studies, as well as integrating input from different agencies involved with the mining industry in Saskatchewan.

“You don’t have to go far to see the impact the extremes have had on the region, the prairies have always had an extreme climate which has been highlighted in recent years with widespread flooding having a major impact around the province.

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Cameco, Areva, sign deal with Saskatchewan First Nation for uranium mine – by John Cotter (Canadian Press/Global News – May 31, 2013)

http://globalnews.ca/toronto/

PATUANAK, Sask. – Uranium giants Cameco and Areva have reached a $600-million deal with a Saskatchewan First Nation that supports their mining operations and drops a lawsuit over land near the proposed Millennium project.

The collaborative agreement is with the English River First Nation, a band of more than 1,000 people who live on seven small reserves in the province’s northwest. Another 400 people live off-reserve.

“This introduces a level of stability and predictability around employment, business training and community investment and environmental stewardship,” Cameco vice-president Gary Merasty said Thursday.

“This is a little more certainty around project development. If there is a lawsuit hanging over, you know that introduces a level of risk to the project.” A formal signing ceremony is to be held Friday in the community of Patuanak, about 600 kilometres north of Saskatoon.

Most of the money is to flow to the First Nation over 10 years through contracts with band-owned businesses and wages to band members, who are expected to work at the mines and on community development projects.

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