Potash Corp. alleges mine f laws
Claims shaft at N.B. site failed
Potash Corp. of Saskatchewan Inc. is suing the engineering company that built part of its $2.2 billion Picadilly mine in New Brunswick, alleging that construction flaws have resulted in the “complete fail- ure” of a mine shaft.
The Saskatoon- based miner seeks unspecified damages f rom Cementation Canada Inc., which was hired in 2008 to oversee the design and construction of two 900-metre deep shafts at the mine in Penobsquis, N.B.
The timing of this suit is notable, because Potash Corp. announced on Tuesday that it is halting production in New Brunswick and laying off up to 430 workers.
A Potash Corp. official told a New Brunswick news- paper that the filing of the lawsuit and the announcement of t he production suspension is just a coincidence. Potash Corp. claims the shutdown is simply a response to the weak potash market, which is suffering because of lackluster demand and overcapacity.
Cementation Canada president Roy Slack told the Financial Post that his company is working with Potash Corp. to fix the problems with the mine.
He said Potash Corp. only filed the suit because it wanted to protect its rights under a contract between the two firms before the warranty period expired last week. “We have a good working relationship with PotashCorp. and expect to complete the repairs and settle this matter amicably,” Slack said in an email. Potash did not respond to requests for comment.
Nonetheless, if the allegations are correct, the mine had massive structural damage and was poised for even more problems when Potash Corp. halted production last year. Getting it into shape would have required a massive capital investment on top of the $2 billion the company has already spent to get it into production.
The lawsuit, filed in the Court of Queen’s Bench of New Brunswick in Saint John, N.B., alleges Cementation breached its contract and was negligent because a shaft used for transporting potash to the surface “completely failed” last year. Potash Corp. claims it had to take action to prevent a similar failure of the second shaft, which transports workers and materials in and out of the underground operations.
The s uit contains allegations that have yet to be proven in court.
Shaft construction began in 2010. According to Potash Corp., both the production shaft and service shaft consist of four different geological “zones.” The design and construction of the shafts needed to be modified depending on the rock conditions in each zone.
In one particular zone, the rock tended to “creep” inward and downward during mining, Potash Corp. says in its statement of claim. To prevent this from happening, the design of the shafts called for a foam “spacer” to be used that could accommodate the “creep” without damaging the concrete liner. However, Potash Corp. said Cementation elected to use a stiffer substance called “foamcrete” instead. This placed too much pressure on the shafts and caused major structural problems, according to the company.
In August 2015, Potash Corp. said it discovered a crack in the support structure of the production shaft. A few weeks later, it discovered broken concrete on the floor of the shaft, damage to all four corners of the support structure, and a 10-footlong vertical hairline crack.
The company then said it discovered that a diesel line in the production shaft was bent, that an air line was leaking, and that a water line and feeders were not properly aligned.
Potash Corp. determined the production shaft was unusable. The company then did some testing on the service shaft, and found evidence of the same structural problems. “In both shafts, it was necessary to place netting around the support structures so as to prevent debris from falling,” the company said in the statement of claim.
Not surprisingly, the company claims that the problems are considered “major defects” under the construction contract, which requires Cementation to pay for any problems that will cost more than $50,000 to fix.