After having taken a blow to the midsection two years ago, Saskatchewan’s potash business is beginning to stir again and is coming out fighting for an expanded share of the global market
But, the opposition has changed since the producer, Uralkali, announced on July 30, 2013 that it was pulling out of the Belarus Potash Corporation export JV with Belaruskali and would sell its product directly to China at a reduced price.
It was a blow that the global potash market still hasn’t recovered from and perhaps never will since the new combatants in the ring aren’t inclined to join Saskatchewan’s marketing alliance called Canpotex.
The Potash Corporation of Saskatchewan and its tag team partners, Mosaic Company and Agrium Inc, are now facing the Australian-based giant BHP Billiton and German-based K+S AG.
BHP Billiton’s massive Jansen mine, near the village of Jansen, 150 kms east of Saskatoon, Saskatchewan, has gone back to the drawing board. The company has said publicly, “We will continue to modulate the pace of development as we seek to time our entrance to meet market demand, thereby maximising shareholder returns.”
When completed it will be one of the world’s largest mines, capable of producing eight million tons of marketable potash a year.
Another major project in the province is the Legacy mine. It is being developed further south near Moose Jaw where K+S Potash Canada, a subsidiary of German-based K+S Group, is building its Cdn $4.1 billion Legacy solution mine that is scheduled to begin production by the end of 2016, ramping up to two million tonnes per year in 2017 and reaching full capacity of 2.86 million tonnes by 2023.
The mine is the first new potash mine to be built in Saskatchewan in the past 40 years and will ship potash through a new potash terminal under construction at the Pacific Coast Terminals site, Port Metro Vancouver in the Port Moody area. The new terminal will be designed to load up to 2.2 million tonnes annually of the crop nutrient.
However, by far, the largest potash producer in the province is the Potash Corporation of Saskatchewan (PotashCorp) that owns and operates five mines at: Rocanville, Allan, Lanigan, Cory and Patience Lake; and is the largest of the potash export consortium, Canpotex, with its two partners the Mosaic Company that has mines at Esterhazy K1 & K2, Colonsay and Belle Plaine and Agrium with one mine at Vanscoy.
In 2013, 15.8 million tonnes of potash were produced from ten mines in the province – eight of them conventional underground and two being solution mines, which is what the new Legacy mine will be once it’s completed. New mines are also under construction at Rocanville (PotashCorp) and Esterhazy (Mosaic).
Trading Blows Recently, PotashCorp, in an effort to secure market domination, made what was apparently an unsolicited, friendly bid to purchase K+S. At the time of writing, the most recent bid for the firm was 7.9 billion euro (Cdn$8.6 billion) that was rejected.
Canpotex ships potash by truck and rail to distribution centers in the U.S. and by rail through the Port of Thunder Bay, Port Metro Vancouver and Portland, OR; with plans to also develop a new potash terminal at the Port of Prince Rupert in Northern British Columbia which recently opened a 1,000-acre industrial park on Ridley Island.
According to its environmental documentation the new terminal, when built, will include:
A marine wharf, access trestle, causeway and all weather ship loading facility capable of receiving vessels of up to 180,000 dead weight tonnes (DWT).
An 180,000-tonne potash storage building with associated conveyor and dust collection systems.
An automated railcar unloading and conveyor system, automated portal scraper and dust collection system.
A settlement pond for storm water, wash down water and marine outfalls.
Administration, personnel, maintenance and storage buildings.
Site services, including water supply, natural gas and sewage.
The group also recently upgraded its potash terminal, Portland Bulk Terminal, with an improved conveyance system that will provide faster turn-around times for rail cars and ships and a new storage building.
Recently, Canpotex also placed an order for 700 new railcars from Canadian manufacturer, National Steel Car, at a cost of Cdn$70 million. The purchase will bring the potash exporter’s fleet to more than 7,000 rail cars. Canpotex ships roughly 10 million tons per year of potash, representing Cdn$3 billion in exports.
