POTASH IN OUR PROVINCE
Overseas demand driving record sales of Saskatchewan potash
In Saskatchewan, potash continues to be the fuel for success. Saskatchewan is home to the largest and richest potash resource in the world and the province’s potash industry accounts for approximately 30 per cent of world production.
In 2017, there were record sales of $4.8 billion – up 11 per cent from 2016 – and the Government of Saskatchewan is expecting the 2018 numbers will also be record-breaking due to continued growth in overseas demand.
“Demand for Saskatchewan potash has never been stronger,” said Saskatchewan Minister of Energy and Resources Bronwyn Eyre. “Potash prices, although still well below the highs experienced several years ago, have slowly recovered, which is also driving renewed interest in potential new potash construction. In addition to the 10 facilities operating in the province, there are many other projects at various stages of evaluation.”
She added that “the long-term prospects are excellent for the Saskatchewan potash industry. Higher population growth, combined with growing world income levels and increased biofuel consumption, indicates that the global demand for potash will increase over the long term.”
One of the big stories this year centred on the merger of Potashcorp and Agrium to form Nutrien, based in Saskatoon. Nutrien rebounded from a minor first-quarter loss to post net earnings from continuing operations of $741 million and earnings before interest, tax, depreciation and amortization of $1.5 billion in the second quarter.
There has also been big news surrounding Gensource’s Vanguard One project in central Saskatchewan. On August 9, 2018, it was announced that Gensource successfully completed the environmental assessment process through the Saskatchewan Ministry of Environment and was not required to complete a full environmental impact assessment. On October 4, 2018, Gensource had executed an agreement to lock up the plant site location for the project, which allows the company to continue moving forward to construction.
Western Potash Corp is another company eyeing future construction – as early as 2019 – on the Milestone Phase I Potash Project located 35 kilometres southeast of Regina. The company announced in July that it had successfully developed a groundwater supply source that can fully support the water requirements for the project.
In November 2019, the joint project between Encanto Potash Corp. and Muskowekwan First Nation in southeast Saskatchewan could also begin construction. On July 23, the partnership announced that it had received Government of Canada funding to support the upcoming engineering steps.
Looking a bit further into the future, the Mosaic Company is expecting to complete construction of its multibillion dollar K3 potash project in Esterhazy in 2024. The K3 production shafts are the first to be sunk in the province in nearly 50 years, reaching potash at 3,350 feet below the surface. Upon completion of K3, Mosaic’s Esterhazy operation is expected to be the largest, most competitive underground potash mine in the world.
BHP Billiton’s Jansen project is ongoing and is the most advanced potash project in the province. Jansen has the potential of being the largest potash mine in the world once fully developed. Earlier in 2018, BHP announced its two shafts had reached potash deposits almost a kilometer deep below ground.
Eyre noted that the continued progress of potash projects in Saskatchewan bodes well for the future. At current rates of production, Saskatchewan could supply the world’s potash needs for several hundred years.
“With the major expansions at existing mines by Nutrien and Mosaic, the new Bethune mine constructed by K+S, and continued interest in potential new mine development by many international companies, the Saskatchewan potash industry is well positioned to be the world’s largest potash producer well into the future,” she said.
And this success, Eyre explained, is something everyone in Saskatchewan can celebrate. She said the Saskatchewan potash industry is “a major economic driver to the provincial economy.” Since 2006, over $20 billion has been dedicated to the expansion of existing mines and new mine development, while there are over 5,000 employees currently employed at mine sites and thousands more who depend on the potash industry for their livelihood.
In addition to employment, Eyre said the potash industry provides hundreds of millions of dollars annually in direct taxes and royalties to the Government of Saskatchewan – which she said supports hospitals, schools, highways and infrastructure across the province.
Eyre said the government is working hard to ensure these benefits continue to be realized by promoting the industry at national and international mining events, regularly meeting with companies interested in investing in the potash sector, ensuring regulations are clear and transparent and investing in geological information that assists companies in making investment decisions.
She said the Government of Saskatchewan regularly reviews potash royalties and taxation to ensure that the province remains competitive in attracting new investment.
“The Potash Production Tax (PPT) includes several incentives to encourage continued growth in the industry and a simplified Potash Crown Royalty was introduced in 2017,” she said. “The incentives in the PPT have been largely credited with the expansion of the industry over the past decade.”
On the part of potash companies, striving to be innovative is a key in ensuring success moving forward. Eyre said the province’s potash industry has always been driven by innovation. She notes that the Blairmore Ring, which allows companies to successfully construct mine shafts through waterbearing ground and gain access to the potash resource, was a primary driver in unlocking Saskatchewan’s potash potential.
“Today, companies continue to evaluate and invest in new technologies to make their operations more efficient, profitable, environmentally responsible and safe,” she said. “Some examples of this are the increased use of remote control technology for underground mining equipment and secondary solution mining.
“Members of the existing industry are not the only companies employing innovative techniques. Some of the potential new potash miners in Saskatchewan are planning to use solution mining techniques that involve horizontal drilling to develop mines on a much smaller scale than in existing mines. According to the companies, this can be done efficiently and may actually reduce the environmental footprint by bringing less salt to the surface.”