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Saskatchewan Mining

Saskatchewan Mining Association predicts mining sector growth – by Robyn Tocker (Regina Leader-Post – May 25, 2013)

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

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Saskatchewan’s mining industry employs over 30,500 people who work in over 20 different mining operations across Saskatchewan. The province supplies a variety of minerals in Canada and internationally. It is best known for being the world’s leading producer of potash, producing roughly one third of the world’s supply. “Saskatchewan is also the world’s second-leading producer of uranium, supplying roughly 17 per cent,” said Pam Schwann, the executive director of the Saskatchewan Mining Association (SMA).

Saskatchewan’s mining industry also produces minerals such as lignite coal, which supplies over 50 per cent of the province’s baseload power. Gold, salt, sodium sulphate, bentonite and other clays are also mined.

“One of the key advantages Saskatchewan has over other jurisdictions [in producing these minerals] is its geologic framework,” Schwann said. Both the potash-bearing Prairie Evaporite Formation and the uranium-bearing Athabasca Basin host world class deposits in terms of tonnage and grade.

Saskatchewan also has an advantage because of a positive policy environment. Schwann explained the annual Fraser Institute Survey identified that Saskatchewan ranked 13th out of 96 global jurisdictions in terms of offering overall policy attractiveness for investment. Saskatchewan’s postsecondary institutes, including the Apprenticeship and Trade Certification Commission, also lend a hand.

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Saskatchewan finds small solutions to big pipeline problems – by Yadullah Hussain (National Post – May 24, 2013)

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

Stunned by Enbridge Inc.’s Kalamazoo River oil spill in 2010 that disrupted its sole market access in Saskatchewan, Crescent Point Energy Corp. found an unlikely ally: an agriculture company.

Toronto-based Ceres Global Ag. Corp owns a stake in Southern Stewart Railway set up to transport grain from Stoughton, Sask., to Regina, from where it connects to other lines. But floods over the past two years had wrecked its agriculture business, and the province’s burgeoning oil production seemed like a good way to bring its trains back into active duty.

The arrangement took off. Within the space of a year, SSR was shipping nearly 30,000 bpd of oil out of Saskatchewan, helping Crescent Point and others escape the heavy oil discounts plaguing Canadian producers.

“The Kalamazoo river leak was a bit of an eye opener as a lot of our production is in Saskatchewan and we are not blessed with the number of pipeline alternatives they have in Alberta, so we really had one way of getting our crude to the market, and that’s the Enbridge mainline system,” said Trent Stangl, vice-president at Crescent. “The SSR has been a key part of our rail plan for southeast Saskatchewan.”

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Potash, uranium to remain leaders of pack, forum hears – by Scott Larson (Saskatoon StarPhoenix – May 1, 2013)

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

The mining industry in Saskatchewan, led by potash and uranium, will continue to be a strong sector, says Gary Delaney, chief geologist with the province.

“We are very optimistic about potash and uranium,” said Delaney while speaking to an audience at the third annual Saskatchewan Mining Forum.

“Our mineral sector is well positioned for growth. The roots are strong and we are seeing vigorous exploration. There is more opportunities, there is more potential, and we hope going forward that will be realized and our sector will continue to grow.”

There are 10 producing potash mines in the province and at least nine potential greenfield projects have been identified. Pam Schwann, executive director with the Saskatchewan Mining Association, agreed those two sectors will lead the way. “I don’t see any big changes there.”

She said world population growth, increased industrialization, energy and food needs mean potash and uranium will continue to be high in demand.

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Cameco’s $800-million tax battle – by David Milstead (Globe and Mail – May 2, 2013)

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.

Did you know one of the largest sellers of uranium in Switzerland is Saskatoon-based Cameco Corp.? The Canada Revenue Agency has been aware for some time. And now Cameco shareholders are getting more details about the potential problems it may cause the company – as in more than $800-million in back taxes.

It wasn’t supposed to work out this way, of course. In 1999, Cameco set up a subsidiary, Cameco Europe Ltd., in low-tax Zug, Switzerland. Cameco then signed a 17-year deal to take the uranium it produces in Canada, sell it to Cameco Europe, and have Cameco Europe make the final sale to the end customers all across the world.

Why inject a middleman into the transaction? Well, Cameco is selling the uranium to Cameco Europe at the low prices reflective of 1999, when the deal was signed. Cameco is recording little to any profit in Canada; instead, all the profits appear in Zug, where the tax rate is lower.

This has been a boon to Cameco’s bottom line. The uranium producer estimates it has avoided declaring $4.9-billion in Canadian income, saving it $1.4-billion in taxes, over the last 10 years.

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Potash Corp. sees rising demand in North America, overseas markets – by Pav Jordan (Globe and Mail)

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 clouds are parting over the global potash market, the world’s largest producer of the crop nutrient says.

After four consecutive quarters of falling profit, Potash Corp. of Saskatchewan said Thursday it’s seeing higher sales to China, Latin America and India as customers are lured back by low prices after a buyers’ strike last year.

“We believe we are in a recovery year this year,” Bill Doyle, the ever-optimistic chief executive officer of Potash Corp. and the industry’s most vocal champion, said on a conference call with analysts on Thursday. “The impact was evident in our first-quarter earnings.”

Global potash demand slumped hard last year as key consumers in India and China delayed signing new contracts with producers for months, resisting high prices for the nutrient used to strengthen plant stalks against drought and disease. The impasse ended in December when Canpotex Ltd., the joint venture of Potash Corp., Agrium Inc. and Mosaic Co. that sells potash outside of North America, agreed to significantly lower-priced long-term contracts.

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Resource boom fuels Saskatchewan’s soaring economy – by Greg Quinn, Bloomberg News/Regina Leader Post – April 22, 2013)

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

Kylan Dales gave up a banking career to work out of a mobile office and plow his pickup truck through snow in Saskatchewan’s oilfields.

The 30-year-old’s starting salary as a field operator for PetroBakken Energy Ltd. matched what he made as a retail marketing consultant at Servus Credit Union. Dales’s career shift reflects a “rotation” of demand that Bank of Canada Governor Mark Carney says the economy needs – toward business investment and exports and away from consumer spending.

While most of the country faces sagging growth and slowing labour markets, Saskatchewan is benefiting from corporate investment aimed at tapping global demand for natural resources.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market capitalization, has expanded capacity. Cameco Corp., and Canada’s biggest uranium producer, is building its Cigar Lake mine atop the world’s largest undeveloped high-grade uranium deposit.

“There is more going on in this province now than I have ever seen,” said Gavin Semple, 67, chairman of Regina farm-equipment maker Brandt Industries Ltd. “Whether it’s population growth, investment, almost any criteria that you want to use to measure, this is a high point,” said Semple.

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Jansen project seeking green light from BHP board – by Pav Jordan (Globe and Mail – April 15, 2013)

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.

Saskatchewan’s giant Jansen potash project seems just a signature away from final approval, but don’t hold your breath on a decision from the board of BHP Billiton Ltd.

The world’s largest miner is working on the production and service shafts, which are the longest lead items of potash-mine development. The $14-billion project still needs a green light on design engineering after deciding to double initial output on Jansen.

“We are finalizing this design engineering as part of the Jansen project feasibility study, which will be presented to the BHP Billiton board,” said company spokesman Ruban Yogarajah. “While this occurs, we will finish building the camp and continue shaft excavation and site preparation.”

Once built, Jansen is expected to be the world’s largest potash mine, dwarfing even those of BHP’s nearest rival, Potash Corp. of Saskatchewan Inc., which has mines nearby.

The mine, set in flat prairie lands about 150 kilometres southeast of Saskatoon, is a bet by BHP Billiton that potash, a crop nutrient, will become the world’s most important mined commodity as global food demand rises with new demand from emerging economies, where increasing affluence is changing eating habits.

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The poetry of Potash Corp.’s attempted takeover by the Dead Sea – Editorial (Globe and Mail – April 12, 2013)

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.

There is a certain poetic justice in the difficulties that Potash Corp. of Saskatchewan Inc. is having as it tries to acquire a controlling interest in Israel Chemicals Ltd., although the government of Israel should not stand in its way, yielding to economic nationalism.

In 2010, the management of Potash Corp. was quite willing to let Canadian economic nationalism work against its proposed takeover by BHP Billiton Ltd., an Australian-British mining corporation; in the end, the federal government took the position that BHP’s purchase would not be of net benefit to Canada.

Yair Lapid, the new Israeli Finance Minister, has gone so far as to say that a takeover by Potash would be “an un-Zionist act.” Such an opinion as applied to a Canadian company presents a striking contrast with the Canadian government’s emphatic support for Israel, expressed in Prime Minister Benjamin Netanyahu’s invitation to John Baird, the Minister of Foreign Affairs, to help revive the Middle East process; Mr. Baird has described himself as a “true believer.”

Israel Chemicals, which mines the Dead Sea at Sdom (named after the Biblical Sodom), is the sixth-largest potash producer in the world, in a highly concentrated industry.

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Billiton weighs mine expansion – by Scott Larson (Saskatoon Star Phoenix – April 11, 2013)

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

BHP Billiton still has plenty of work to do on its proposed $12-billion Jansen potash project before it can take the next step and submit the project to its board for final approval. The Australian mining giant has said it will hold off giving the green light to any major new projects, including Jansen, until at least June 30.

At a Bloomberg conference in Sydney on Wednesday, BHP’s chief financial officer, Graham Kerr, indicated the Jansen project could be presented to the board in the next financial year. That means the Jansen project could go before the board early as this July or as late as June 2014.

A recent story in the Sydney Morning Herald said Jansen is “likely to be among those considered first” once the freeze has been lifted.

BHP spokeswoman Bronwyn Wilkinson said there is still a substantial amount of work to be done and no time frame has been set as to when the Jansen project will be presented to the board for approval.

“The Jansen project is in feasibility study phase and remains subject to BHP Billiton board sanction,” Wilkinson said. BHP’s decision to increase Jansen’s first phase from its initial production of two million tonnes per annum (2mtpa) of potash to at least 4mtpa “requires extensive additional engineering design, particularly on the surface infrastructure.”

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Canadian uranium industry a step closer to trading with India – by Henry Lazenby (MiningWeekly.com – April 10, 2013)

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

TORONTO (miningweekly.com) – The Mining Association of Canada (MAC) said it supported the Canadian Nuclear Safety Commission and India’s Department of Atomic Energy finalising and signing the Appropriate Arrangement for Nuclear Cooperation agreement on Monday, which placed the Canadian uranium industry one step closer to trading with India.

“This is tremendous news for Canada’s uranium mining industry, which is the second largest in the world. This puts Canada in position to capitalise on growing global demand for nuclear energy and opens up the uranium sector to India, which is a large and strategic emerging market for the commodity as a key source of power,” MAC president and CEO Pierre Gratton said.

Finalising the arrangement followed on the heels of the Agreement between the Government of Canada and the Government of India for Cooperation in the Peaceful Uses of Nuclear Energy.

The arrangement outlined the tracking, monitoring and reporting requirements that would ensure the material is used for peaceful civilian purposes only. It was the next step towards full implementation of the Nuclear Cooperation Agreement (NCA) between Canada and India, which was signed in 2010.

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Saskatchewan seeks to spur uranium expansion with royalty cut – Rod Nickel (Reuters U.S. – March 22, 2013)

http://www.reuters.com/

WINNIPEG, Manitoba, March 22 (Reuters) – The Western Canadian province of Saskatchewan is cutting its tax on uranium mining in hopes of spurring construction of more mines and boosting its revenues, a top government official said on Friday.

The provincial government is proposing the first changes in 12 years to its system of charging royalties to uranium miners, calling the old formula a barrier to investment. Low uranium prices in the two years since the Fukushima meltdown in Japan have led to delays in some mine projects, but miners see a brighter outlook as new reactors are built.

The adjustments would save the two uranium miners in the province, Cameco Corp and Areva SA, only a combined C$15 million ($14.7 million) in Saskatchewan’s fiscal year 2013-14.

But those savings are set to grow as the formula will reflect the miners’ actual costs in future years, and remove some of their risk from unforeseen events, said Kent Campbell, deputy minister of Saskatchewan’s Ministry of the Economy. “The biggest thing is it helps to de-risk projects,” Campbell said in an interview.

“It was very clear that (miners) felt the economics of future greenfield projects would not work if the system was not changed.”

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NEWS RELEASE: Harper Government supports development of first ever on-reserve potash mine

TRADING SYMBOL: TSXV: EPO

VANCOUVER, March 19, 2013 /CNW/ – Encanto Potash Corp. (“Encanto” or the “Company”) (TSXV: EPO and OTCQX: ENCTF) along with The Honourable Bernard Valcourt, Minister of Aboriginal Affairs and Northern Development and Muskowekwan First Nation Chief Reginald Bellerose today announced an important milestone in the development of the first on-reserve potash mine in Canada.

The Muskowekwan First Nation potash mine project has been accepted by the federal government under the First Nations Commercial and Industrial Development Act (FNCIDA). The Act will enable the federal government to enact regulations that incorporate a provincial regulatory regime to govern commercial and industrial activities within a province.

The federal government and the Muskowekwan First Nation will begin discussions with the Province of Saskatchewan to explore a potential regulation under FNCIDA relating to the proposed mine.

“I am pleased to announce that the Muskowekwan First Nation potash project is a step closer to becoming a reality,” said Minister Valcourt. “The development of the first on-reserve potash mine in Canada will create employment and economic growth as well as other long-term benefits for the First Nation and surrounding communities. I applaud the community and its leaders for their vision and commitment to the long-term prosperity of the Muskowekwan First Nation.”

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Canada supports development of first ever on-reserve potash mine [in Saskatchewan] – by Henry Lazenby (MiningWeekly.com – March 20, 2013)

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

TORONTO (miningweekly.com) – The Canadian federal government and the Muskowekwan First Nation on Tuesday announced the Muskowekwan First Nation potash project had been accepted by the federal government under the First Nations Commercial and Industrial Development Act (FNCIDA), which enables the federal government to enact a provincial regulatory regime to govern commercial and industrial activities within a First Nation reserve.

First Potash Ventures, a partnership between Encanto Potash and Muskowekwan Resources, was working toward developing the mine on the First Nation’s reserve, located 100 km north-east of Regina. The mine was expected to produce up to 2.8-million tons of potash a year over a 50-year-plus lifetime.

The project is expected to provide economic opportunities for the Muskowekwan First Nation, as well as the surrounding area, by providing training and employment opportunities during the construction and operation of the mine.

While the project would become the first on-reserve potash mine in Canada, the proposed Muskowekwan project is the first in Saskatchewan to use FNCIDA to regulate a project on reserve lands.

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Cigar Lake nears startup as uranium price recovers – by Pav Jordan Globe and Mail – March 6, 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.

Cameco Corp. is just months away from opening its Cigar Lake uranium project, the world’s second-largest high-grade uranium deposit, more than thirty years after it was discovered and just as global prices for the nuclear fuel show promise of a rebound.

“We’re on track with Cigar Lake. We said we’d be starting the mining in mid-2013 and we will and we’ll have first production from the mill in 2013,” said Tim Gitzel, chief executive officer of the Saskatchewan-based owner of uranium projects in Canada, the United States, Australia and Kazakhstan.

“It’s been a long project. A long time. That ore body was discovered in 1981 and here we are now, not decades or years but mere months away from first production, so we’re pretty excited about it,” he said on the sidelines of the annual Prospectors and Developers Association of Canada (PDAC) conference in Toronto.

Cigar Lake will supply uranium for some 20 or 30 years. Cameco, the world’s biggest publicly traded uranium producer, is the 50 per cent owner of the northern Saskatchewan mine, which has ore grades that are among the world’s highest, at 100 times the world average.

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Saskatchewan potash royalty system ‘a mess:’ report – Canadian Press (Globe and Mail – February 8, 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.

Saskatoon — The Canadian Press – A tax policy expert says Saskatchewan’s potash royalty structure is a complicated “mess” and Premier Brad Wall has “his head in the sand” if he thinks it’s working.

Jack Mintz, with the University of Calgary, said in report released Friday that the current royalty and tax system for Saskatchewan’s potash industry “has actually reached the point of incoherence and absurdity.”

“It’s incredible, really,” Mr. Mintz said at a news conference in Saskatoon. “I mean I’ve worked [in] a lot of countries and this is absolutely incredible as a system. In fact, in my view it’s the worst royalty system I’ve seen in Canada.”

The report said the “tangled thicket of royalties, taxes and credits” can differ between start dates for production, projects of different sizes or even projects of similar size but with different profitability. It also has potash producers generally enjoying a much lighter tax burden on marginal investments than those in other industries, according to the report.

“The result is distortions and inefficiencies, resulting in subpar investment activity, which can only stand in the way of Saskatchewan reaching its full economic potential.”

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