Potash industry expected to return to growth in 2020
Potash continues to play an integral role in the Saskatchewan economy and as the world’s largest producer, Saskatchewan is well positioned to benefit from improved global market conditions. Saskatchewan potash companies help meet the demands of the world’s growing need for food and fertilizer. Looking ahead to 2020, Saskatchewan will continue to produce sustainable potash and maintain its leadership in the industry.
“Saskatchewan’s potash production process is the most sustainable, clean and innovative in the world,” said Bronwyn Eyre, Saskatchewan Minister of Energy and Resources.
“Despite challenges in the latter half of 2019, the potash market is expected to return to growth in 2020 with improved planting conditions in the United States and higher global prices on agricultural commodities.”
Eyre said that there was a marginal impact to forecasts in mid-2019, with reduced demand from several major markets and increased world supply. However, the potash industry is currently on track to equal 2018 record sales volumes, and revenues are forecast to remain strong.
Pamela Schwann, president of the Saskatchewan Mining Association (SMA), says potash mining has a far-reaching impact on the province’s economy.
In 2018, there were 20.7 million tonnes of potash mined from Saskatchewan, generating sales of over $4.4 billion. Over 95 per cent of this product is exported to markets including the U.S. as well as overseas to China, Brazil and India. The industry directly employs over 5,100 people in Saskatchewan with an annual payroll of over $1 billion.
“The sector contributed $5.52 billion to the province’s GDP in 2018, and paid over $500 million in provincial, federal, and municipal taxes which is significantly more revenue than is collected by any other jurisdiction in Canada,” said Schwann. That revenue goes to fund health care and education, as well as provincial and municipal infrastructure.
“Potash mines purchased approximately $4 billion in goods and services, with over $2 billion of these purchases from Saskatchewan’s excellent supplier community that includes many businesses owned by Indigenous organizations,” said Schwann.
Saskatchewan residents also benefit in diverse ways from the $15 million-plus invested each year by potash companies in community partnerships. Those dollars enhance life in our communities by supporting special events, health and wellness programs and agricultural education programs.
There are currently three potash-producing companies in Saskatchewan: Nutrien, The Mosaic Company and K+S Potash
Canada. These companies operate 10 mines across central and south Saskatchewan; seven are underground and three are solution operations. All companies have a significant corporate presence in Saskatoon and Regina.
Four new potash projects are in different stages of development in the province, according to Eyre.
“A number of projects have completed the provincial environmental assessment process and are at different phases of evaluation and development. These include BHP’S Jansen project, which is expected to have an initial capacity of over four million tonnes per year and is currently completing its shaft development.
Meanwhile, BHP continues to evaluate global potash markets,” said Eyre.
Western Potash continues to advance its Milestone project, located 30 km southeast of Regina. The solution mine expects to produce 146,000 tonnes of potash annually. Drilling and connecting of the first injection wells in the potash horizon has been successfully completed. Construction is forging ahead with full-scale production anticipated to begin by June of 2020.
Canpacific’s Albany project is a joint venture between North Atlantic Potash Inc. and Rio Tinto Potash Management Inc. The project, also located 30 km southeast of Regina in the rural municipalities of Lajord and Francis, is a 3.25 million tonne per year solution mining operation. It recently received environmental impact assessment approval for its next phase of development.
Yancoal’s Southey project is a proposed greenfield solution potash mine located 60 km north of Regina in the rural municipalities of Longlaketon and Cupar. The project has received environmental assessment approval and is currently at an advanced “feasibility-level” stage. The projected production capacity for the Southey project is 2.8 million tonnes per year, with a lifespan of 65 to 100 years.
“Saskatchewan continues to be internationally recognized as one the world’s leading jurisdictions for mining investment,” said Eyre. “The Fraser Institute, in its 2018 Survey of Mining Companies, identified Saskatchewan as the most attractive jurisdiction for mining in Canada. It ranked the province third for global mining investment and the number one jurisdiction in the world for mining policy integrity.”
To continue to attract mining investment, Schwann says Saskatchewan must remain a competitive jurisdiction. “As price takers on the global stage, governments at all levels must make decisions that enhance the global competitiveness of and investment attraction in Saskatchewan mining operations. This is what will drive increased employment and business opportunities for the industry and ensure Saskatchewan communities continue to be vibrant for the next 50 years.”
Eyre said that the government also promotes opportunities for potash investment in Saskatchewan by participating in several national and international mining and agricultural events. The province also hosts international delegations to promote our world-class potash resource, available incentives and regulatory framework.
As 2020 approaches, Eyre said Saskatchewan will continue to dominate the potash market and with the development of many new local projects, will be on track to have its best year yet.