Vanscoy potash mine expected to stay off-line through February

SASKATOON The world’s largest fertilizer company is planning to keep one of its Saskatchewan potash mines off-line for at least another five weeks, meaning around 250 workers won’t be back on the job until March at the earliest.

Nutrien Ltd. spokesperson Will Tigley said “ongoing market conditions” contributed to the company’s decision to extend the production shutdown at its Vanscoy mine, which is about 30 kilometres southwest of Saskatoon.

“Decisions that affect employees are always difficult,” Tigley said.

“(But) until the market starts strengthening a little bit, we’ll have to continue managing our inventory,” he added, referring to the practice of cutting production to avoid a buildup of potash when sales dip below expectations.

United Steelworkers staff representative Darrin Kruger called the decision “extremely disappointing and frustrating ” because repeated extensions give laid-off workers no certainty and no ability to plan their futures.

“Only telling them a month at a time what the future looks like is really hard for people. If it’s bad news, tell them so they can adjust and move on. But this four, five weeks at a time is really tough,” Kruger said.

This is the second time Nutrien has extended the shutdown at its Vanscoy mine.

The potash giant temporarily shut down three of its six Saskatchewan mines at the beginning of November, citing a weak global fertilizer market leading to lower demand for potash mined in the province.

The company’s Allan, Lanigan and Vanscoy mines — all of which are near Saskatoon — were originally expected to stay off-line for eight weeks, a shutdown that resulted in around 700 temporary pink slips going out.

Workers at the Allan and Lanigan operations returned to work at the end of December, but Nutrien subsequently extended the shutdown at Vanscoy, which is thought to be among its highest-cost mines, until at least the end of January.

At the time, Scotia Capital Inc. estimated Nutrien had cut 1.3 million tonnes of production since July, a significant chunk of the roughly 13 million tonnes — about 19 per cent of total global shipments — it expects to sell this year.

While that figure is significant, Scotia analysts warned that additional cuts in 2020 were “inevitable” given high Chinese inventory levels.

Pointing to US$1.68 billion in profits last year and several recent high-profile, multimillion-dollar acquisitions, Kruger said no one should be under the impression that Nutrien is struggling financially.

“We’re very supportive of that growth. It’s fantastic — this is a big new company. But laying people off when this company is doing extremely well and continues to expand and grow … is really tough for workers to understand and accept.”

Nutrien is not the only Saskatchewan potash producer affected by reduced demand, which has been attributed to factors as diverse as extremely wet weather in the American Midwest, slow contracting with overseas buyers and low palm oil prices in Malaysia.

Mosaic Co. has indefinitely shut down its Colonsay mine and undertaken “short term” shutdowns at its K1 and K2 operations near Esterhazy, while K+S Potash Canada slashed production at its Bethune solution mine.

The last year has been disappointing for the potash industry, which employs about 5,000 people in Saskatchewan and accounts for five per cent of the province’s roughly $80-billion gross domestic product.

At the same time, Nutrien remains bullish about the future — largely because it believes a growing global population will, over the long term, lead to higher demand for fertilizer to grow the crops needed to feed them.