Mosaic unveils first step of $6B expansion.
It’s back to the future.
The Mosaic Company celebrated the first phase of its ambitious $6-billion expansion of its Saskatchewan potash mining operations by looking backward — a bit.
Running through Friday’s ceremony at Mosaics’s K2 mine east of Esterhazy was an awareness that it’s been 50 years since June 8, 1962.
That’s the day on which a crew sinking a shaft for one of Mosaic’s corporate ancestors broke through into potash-bearing ore after five years of hard, and often frustrating work. And it was another three months until operations began at the mine and mill — exactly 50 years ago this week.
“When that first tonne of ore came up, who knew that Saskatchewan, and Esterhazy, would be the centre of the potash industry?” Mosaic president and CEO Jim Prokopanko told a tent packed with executives, miners — and retired miners.
Sinking that first shaft cost about $50 million. Boring the shaft for Mosaics’s new K3 mine, midway between K2 and Esterhazy, will cost about $500 million.
Being marked Friday was the first stage of expansion at K2, which will add 800,000 tonnes of annual operating capacity to it.
All told, Mosaic is spending $3 billion on its properties in the Esterhazy area, including a towering headframe at K3 that, when completed, will be the tallest man-made structure between Winnipeg and Calgary. Work at the existing K1 was completed about 18 months ago; that at K3 is expected to be finished by 2016.
Another $3 billion is being spent on Mosaic’s other properties at Belle Plaine and Colonsay. “That’s a lot of money and it represents our confidence in these communities and in the province,” Prokopanko said.
“More production is good for Saskatchewan; it’s good for this area,” said Tim McMillan, Saskatchewan’s minister of energy and resources.
“We’ve very pleased that it’s been so successful.”
In a quick review of economic conditions around the world, Prokopanko noted tough times in some places, but added there are 75 million more people on this planet to feed every year.
“It’s not like there’s much more land that can be brought into production,” he said, adding there’s only one way to feed them: better crop production — and that means the use of potash.
“There are a lot of commodities, but I can’t pick one that’s more important than potash,” agreed Kurt Stroble, chairman of the board of Hatch, the engineering firm that designed the expansion.
In a scrum with reporters, Prokopanko, fielding questions about the price of potash and the economics of expansion, said a “greenfield” mine — without the mills, roads and electrical systems that existing mines, like those around Mosaic’s existing facilities, would have to spend about $2,500 for each additional tonne of production capacity.
Because Mosaic already has that in place, it can do this for about $1,200 a tonne. “So we’re at a considerable advantage over starting ‘brand new’”, he said.
“The modern potash industry of the world, and of Canada, started here. And to think, 50 years later, we’re doing such a large expansion — sinking a new shaft, expanding it — it’s just great to be part of this.”