Twitter

Saskatchewan Mining

Digging in: Saskatchewan poised to remain world leader in potash – by Ryan Hall (Regina Leader-Post – September 28, 2013)

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

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.

Read more

Saskatchewan’s history of potash, politics and profit (Regina Leaderpost – September 28, 2013)

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

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).

Read more

CRA says Saskatchewan uranium giant Cameco has avoided paying hundreds of millions in Canadian taxes by offshoring profits in Switzerland – by John Greenwood (National Post – September 26, 2013)

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

The Canada Revenue Agency says Saskatchewan-based Cameco Corp. hasn’t been paying its taxes and it wants the money. Now Saskatchewan premier Brad Wall has joined the fray, calling for Cameco, the world’s largest publicly traded uranium producer, to pay up.

Speaking to reporters this week, Mr. Wall said part of the tax revenue that Ottawa collects ends up going back to the provinces, so when the CRA says it’s not getting what it believes it should, “that’s a concern to [Saskatchewan] as well, and it should be. It doesn’t matter who the company is, or the individual. We should pay taxes that are due.”

At issue is Cameco’s alleged practice of shifting profits to a Switzerland subsidiary where taxes are lower. And while the Cameco case has been going on for several years and though the CRA won the most recent round, the ruling is being appealed and observers say it is unclear who will come out on top.

Read more

China’s potash deal with Russia threatens Canadian profits – by Carrie Tait (Globe and Mail – September 25, 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.

CALGARY — China has bought a chunk of one of the world’s largest potash producers, giving the Asian country more control over what price it should pay for the fertilizer – a move that could drag down prices for the mineral and eat into profits for Canada’s potash companies.

China Investment Corp., Beijing’s sovereign wealth fund, agreed to acquired a 12.5-per-cent stake in Russia’s OAO Uralkali. The deal – a debt-for-equity exchange between CIC and a company owned by three Russian oligarchs – comes after Uralkali said it intends to break from Belarus Potash Co., the cartel it had with state-owned Belaruskali.

Companies controlled by Beijing have invested billions of dollars as part of an overall strategy to secure energy supplies as well as basic manufacturing and building materials. In Canada, Chinese oil and gas companies, along with CIC, are significant energy players. CIC’s deal with Uralkali fits the recent Chinese model: Invest in resources in order to secure supply and exert some control over prices.

China is the world’s most populous country and largest potash consumer, and its stake in Uralkali could hurt Canada’s fertilizer producers because they could further lose pricing power.

Read more

[Saskatchewan Premier] Wall silent on Cameco tax move – by Murray Mandryk (Regina Leader-Post – September 24, 2013)

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

It’s been six years since Brad Wall was elected Saskatchewan premier, but it was three years ago at this time when he cemented himself as a populist politician.

A proposed takeover of Potash-Corp by multinational South African-Australian mining giant BHP Billiton left Wall on the horns of dilemma: Should he subscribe to his philosophically conservative roots and simply allow the market/shareholders to sort this matter? Or should he act in the best interests of a province whose priority would be PotashCorp’s market share and, thus, royalties?

Compounding matters were BHP Billiton’s eagerness to excuse itself from the marketing cartel Canpotex, which controls offshore potash sales, versus the fact that BHP Billiton was in the early stages of developing what may be the province’s biggest potash mine and one of the first new mines to be built in 40 years.

By setting aside his philosophy and choosing to put the interests of Saskatchewan taxpayers first, Wall established himself as a populist leader voters could look to, to do the right thing … even if that meant sometimes going against his natural inclinations.

However, Wall’s future political and governance success will largely depend on his ability to demonstrate that this wasn’t just a one-off and – when the situation requires – that he is capable of taking on the corporate giants on behalf of the Saskatchewan citizenry.

Read more

Canadian uranium sector prepares for rising tide – by Simon Rees (MiningWeekly.com – September 20, 2013)

http://www.miningweekly.com/page/home

TORONTO (miningweekly.com) – Uranium is back on the radar for many in the Canadian investment community. At first glance, this might seem counterintuitive: effective September 2, the uranium oxide spot price stood at $34/lb, while short-term market sentiment remains muted.

But uranium marches to a different, longer-term beat. Bullish analysts and commentators highlight wider macro factors that will eventually act as key supports for output, spot prices and fixed-term supply contracts. Canada is poised to reap great rewards as the world’s second-largest producer of uranium, they argue.

However, others urge caution; long-term macro expectations have the nasty habit of falling flat, while the junior spectrum – so critical for broadening the pipeline of available projects – continues to suffer from strong economic headwinds. Then there is the question of the possible effect that Quebec’s moratorium on uranium exploration and exploitation may have.

Canada’s two main uranium producers are Cameco and Areva, and both have significant footprints in the prolific Athabasca basin region of northern Saskatchewan.

Read more

A Bitter ‘Fertilizer War’ Gripping Belarus and Russia Is Helping U.S. Farmers – by Andrew E. Kramer (New York Times – September 16, 2013)

http://www.nytimes.com/

MOSCOW — American farmers are getting an unexpected windfall from a contentious fight between Russia and Belarus, a former Soviet splinter state.

The subject of the fight is potash, a fertilizer. The score so far: One imprisoned Russian business executive, the disintegration of a once-effective cartel that kept world potash prices high and political tension between the two countries.

What is being called the “fertilizer war” is the latest of numerous trade and economic spats between Russia and Belarus, whose leaders, though presiding over similar autocratic political systems, do not get along personally, Russian political analysts say. Aleksandr G. Lukashenko, president of Belarus, and Vladimir V. Putin, president of Russia, by most accounts detest each another. Their feelings have spilled over into the fertilizer business.

The potash problem reached a peak on July 30, when Uralkali, the Russian potash company, announced it was withdrawing from an international cartel called the Belarusian Potash Company, or B.P.C., which was created to keep prices high.

Read more

Ottawa accuses Cameco of multi-million dollar tax dodge – by Geoff Leo (CBC News Saskatchewan – September 19, 2013)

http://www.cbc.ca/saskatchewan/

Saskatchewan may have missed out on $300M in corporate tax

One of the largest companies in Saskatchewan is in the midst of a multi-million dollar tax court battle with Canada Revenue Agency (CRA). Cameco has publicly estimated that it could end up owing $800-850 million in Canadian corporate taxes for the years 2008 to 2012, if it loses the case.

CRA contends that the uranium giant set up a subsidiary in Zug, Switzerland for the purpose of avoiding taxes in Canada. However Cameco’s CFO, Grant Isaac, disputes that claim.

He says there’s a compelling business case for having a marketing arm in Europe, close to customers there. “We believe that it was established in accordance with sound business principles and in accordance with relevant laws and regulations,” Isaac told investors at the corporation’s first quarter update in May 2013.

Read more

Dissolution of an industry cartel leaves Potash Corp shareholders wishing ‘icon’ had sold – by Andrew Coyne (National Post – September 11, 2013)

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.

Read more

Start-up problems delay production from Cameco’s Cigar Lake mine into 2014 – by By Lauren Krugel (Canadian Press/Montreal Gazette – September 9, 2013)

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

SASKATOON – Cameco Corp. says its long-delayed Cigar Lake uranium mine in Saskatchewan won’t begin producing until early 2014 because of some glitches it encountered during the start-up process.

The company had expected to produce 300,000 pounds of milled uranium this year, but on Monday said it will be unable to meet that target. The Cigar Lake mine — delayed several times in recent years due to flooding and other technical issues — is 97 per cent complete and had been close to finally starting up.

“When a mine is being commissioned, issues are going to come up and Cigar Lake is no exception,” CEO Tim Gitzel told a conference call.

“While we’re not happy with these delays, we have to keep in mind that Cigar Lake is a long-term project that we expect to last for many, many years. It is an important source of what will be low cost production for Cameco and a key component of our strategy to increase annual production to 36 million pounds by 2018.”

Read more

Uralkali CEO’s ‘bizarre’ arrest in Belarus will heighten potash tensions, analysts say – by Peter Koven (August 27, 2013)

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

TORONTO – The potash industry has become engulfed in political intrigue, as a Russian executive at the centre of a cartel-busting plan has been detained by the autocratic government he used to do business with.

OAO Uralkali confirmed on Monday that CEO Vladislav Baumgertner was detained by authorities in Belarus. He is accused of abuse of power, according to reports. The timing is not coincidental.

Just three weeks ago, Uralkali threw the potash market into chaos by dismantling Belarusian Potash Co. (BPC), a cartel-like marketing company controlled by Uralkali and Belaruskali, its state-owned Belarusian counterpart. Uralkali vowed to end its practice of withholding production to prop up prices, prompting speculation that potash prices will fall dramatically. They are already under pressure.

Belarus is very unhappy with this development, but industry experts suggested that this arrest will only push the two sides further apart. It is the most dramatic political intervention in the potash business since Canada rejected the takeover bid for Potash Corp. of Saskatchewan Inc. in 2010. “It is certainly a bizarre development. You’ve got to think Russia and [President] Vladimir Putin will respond,” said Joel Jackson, an analyst at BMO Capital Markets.

Read more

Tuberculosis at Sask. mine sparks cross-Canada check of workers – by Kelly Malone (CJME.com – August 26, 2013)

 http://cjme.com/

Seven provinces working with TB Control Sask.

A case of tuberculosis (TB) at a Saskatchewan mine has led to contact tracing across Canada. The active tuberculosis was discovered at the Cigar Lake Cameco mine at the end of July and caused the mining company and TB Control Saskatchewan to work together to track individuals possibly exposed to the disease. The latest count showed 130 individuals spread across eight provinces from British Colombia to New Brunswick.

“It’s not uncommon. It depends on the situation and depends on what the communicable disease is,” said Deputy medical health officer in the Saskatoon Health Region Dr. Julie Kryzanowski.

“When that happens then there is notification sent out through interprovincial reporting structures to notify them of the potential exposure so they can be alert and do what needs to be done for people who live in their province or their health regions.”

Under the Public Health Act and disease control regulations there are a number of communicable diseases that are reportable by law, including TB. Public health does a follow up to figure out what individuals may have been exposed. Those people are offered a skin test to see if they have the TB bacteria and are then offered antibiotic treatment.

Read more

Mine firm ousts Hells Angels – by Jason Warick (Saskatoon StarPhoenix – August 24, 2013)

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

Death threats, attacks lead to purge

A Saskatoon man’s life is in danger after he did what no other Canadian business owner has dared to attempt – he got rid of the Hells Angels. And from now on, anyone working for Xtreme Mining and Demolition will be required to deny in writing any connection to a “criminal organization” such as the Hells Angels.

“If you are associated with these type of groups, we’ve got a problem. You are out of here,” said Xtreme owner Leonard Banga. The Hells Angels were purged from Xtreme’s ranks following multiple death threats and other intimidation, as well as attacks on Banga and an employee.

Banga said he’s got nothing against the Hells Angels, pointing to his longtime friendships with several “full patch” members. But when Banga learned of the threats and violence, he knew he had to act decisively to protect his employees and his business.

The Hells Angels, through their lawyer, say the new policy is unfair. Others disagree. “I hope everyone supports (Banga). He has balls. This is how a community starts to stand up to organized crime,” said author and international Hells Angels expert Yves Lavigne.

Read more

The Great Potash Power Play – by Gabe Collins (The Diplomat – August 23, 2013)

http://thediplomat.com/

Potash is perhaps the world’s most strategic fertilizer. Mineable deposits are concentrated in a handful of countries, it cannot be synthesized, and crop yields suffer badly without it.

Russia-based Uralkali, the world’s largest potash producer, turned the global potash market on its head when it announced in late July 2013 it would market potash independently and stop selling through the Belarus Potash Company (“BPC”) marketing structure it previously used to coordinate exports and production.

Prior to Uralkali’s move, two major global marketers—BPC and Canada’s Canpotex—controlled around 70% of potash volume traded worldwide, which helped constrain supply and keep prices high.

Uralkali aims to boost its market share in China, where it is estimated that each 10 kilos of pork consumed requires 1 kilo of potash to produce, since Chinese pigs are increasingly fed with potash-hungry corn and soybeans. Similarly, every 44kg of rice eaten in China is thought to require 1 kg of potash to grow, with application intensity likely to rise in the year to come as China runs short of arable land and seeks to produce more grain from a static land area. Uralkali exported approximately 2 million tons of potash to China in 2012—primarily by rail—and now wants to increase this to 2.5 million tons per year, approximately 22% of China’s forecast 2013 potash demand.

Read more

BHP’s sales plan latest blow to Canpotex pricing power – by Brent Jang (Globe and Mail – August 22, 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.

VANCOUVER — BHP Billiton Ltd. is honing its strategy to sell Saskatchewan potash on its own to Asian customers, sidestepping Canada’s export marketing agency for the farming commodity.

The Australian mining giant, which this week announced a $2.6-billion (U.S.) investment in its Jansen mine southeast of Saskatoon, is crafting detailed plans to transport potash by rail. The company will use Canadian Pacific Railway Ltd. across Western Canada, then connect to Burlington Northern Santa Fe Corp.’s train system through Washington State, say BHP officials.

BHP is still working out the logistics of shipping potash from the Port of Vancouver in Washington, where a sprawling U.S. property has been set aside for a new export terminal that would be built in time for the company to launch sales in 2020.

The company’s plans highlight the new pressure being placed on Canpotex Ltd., Canada’s export agency for potash, one of two groups that together control roughly 70 per cent of global supplies of the fertilizer ingredient, used to boost crop yields on farms. Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc. are the agency’s members.

Read more