Saskatchewan boasts the world’s largest, high quality deposits of potash along with the most innovative and environmentally-friendly mines.
By Joel Schlesinger © 2020 Postmedia Network Inc.
It’s been called an “ocean of potash.”
The massive underground deposit of the commodity in the southern half of the province is so large that Saskatchewan is also often referred to as the “Saudi Arabia” of the key component in fertilizer.
Indeed the province is unique among global potash producers.
Underneath its fertile soil is 10 billion metric tons of potash. That’s the world’s largest, most high-quality deposit of the vital commodity, which contains potassium, an element used in everything from health care to industrial processes.
Most importantly, however, potassium is used in fertilizer.
“It’s one of the secret ingredients” in growing more productive crops, says Pam Schwann, executive director of the Saskatchewan Mining Association.
“And with the world’s growing population, and less arable land available, potash is important everywhere crops are grown.”
Demand for potash is massive, and competition for market share is fierce with Canada—or more specifically Saskatchewan—as the world’s top producer.
The market has suffered from oversupply recently coupled with slowing demand from large nations like China, according to a report from earlier this year by CRU Int. Ltd., as reported in Progressive Farmer.
But long-term demand is expected to grow from developing nations in South America and Africa even as developed economies’ demand growth slows.
Canada’s production, almost exclusively from Saskatchewan, was about 13 million tons in 2019, according to the U.S. Geological Survey, followed by Belarus and Russia.
“Combined, Russia and Belarus produce more potash than Saskatchewan, so they are very serious global competitors for our operating companies here,” Schwann says.
And these nations’ production is increasing with new mines coming online, likely leading to a lot of new product spilling into the global marketplace, potentially driving prices even lower.
Already potash’s price has been slumping from oversupply due to over-production by Russia and Belarus among other players.
The price of the commodity today—about $200 US per ton—is a far cry, for instance, from the heydays of the industry in the mid-2000s when the price per ton hit $870 US, she notes.
Still Saskatchewan’s industry is thriving.
“While potash prices have declined in 2020 compared to last year, Saskatchewan production and sales volumes are, to date, at record levels,” says Bronwyn Eyre, Saskatchewan’s minister of Energy and Resources.
Even with over-supply, and uncertainty from COVID-19, the industry is as impactful as ever for the province’s economy.
Eyre points to Saskatchewan’s 2019 production when producers here sold $6.3 billion worth of the commodity, directly employing more than 5,000 mine-site workers.
As well, the industry paid more than $700 million in resource royalties and taxes.
Overall, Saskatchewan’s mining sector, of which potash accounts for about 80 per cent of all activity, accounted for ten per cent of the province’s gross domestic product. And potash’s importance should only grow.
“The long-term outlook for the sector is strong due primarily to increased demand in developing countries,” Eyre says.
The premise for growth is straightforward: A growing population needs more food grown on less arable land amid one of the greatest challenges to humankind: climate change.
Yet the path to growth is not a straight line upward because of the nature of the global marketplace where Saskatchewan’s top competitors “are price-cutters,” says Steve Halabura, geologist and owner of Concept Forge Inc, a mining consultancy firm based in Saskatoon.
That said, the province has several advantages due to a variety of factors that should bear fruit in the long run.
“Saskatchewan’s advantage is first of all quality of product,” he says.
What’s more, the province is home to the largest producers in the world, which are constantly seeking to become more efficient, innovative and environmentally friendly.
The province’s industry is a who’s who of major producers. Chief among them is Nutrien—formed two years ago after PotashCorp and Agrium merged. The world’s largest potash miner, and headquartered in Saskatoon, it operates six lower-cost mines in the province with a capacity to produce 20 million tons annually, as listed on Nutrien’s website.
The Mosaic Company is the second-largest producer and operates four mines, including a solution operation at Belle Plaine. (Solution mining is increasingly commonplace because of its ability to extract potash from deposits with typically a smaller environmental footprint than most conventional underground mines.)
Other major mining firms are investing in the province too.
Those include German-based mining firm K+S, which opened the first new operating mine in the province in 40 years near Moose Jaw. It too uses solution mining technology.
As well, Australian multi-national BHP is closing in on completing its Jansen project—a conventional underground mine—east of Saskatoon. But after spending several years in planning and development, along with billions of dollars, the company is still considering whether to continue—a decision expected to come in 2021.
Smaller players also look to gain a hold, like Western Potash. It’s in the process of developing its Milestone project near Regina, using advanced solution processes that the company claims leave no salt tailings on the surface, making it one of the greenest operations on the planet.
Yet Western Potash is facing challenges too due to funding delays caused by COVID-19.
In general the pandemic has hurt producers, presenting several logistical obstacles for operating mines with respect to workplace safety requirements—such as physical distancing.
But the measures put in place to overcome these challenges have been “very successful and allowed potash production at all operations to continue with minimal interruptions and impacts,” Eyre says.
Even so, other headwinds are adding uncertainty to the industry’s near-term growth. Those include federal climate change initiatives such as the carbon tax, the proposed Clean Fuel Standard and Bill C-69, which involves higher environmental standards for new projects.
Taken together they potentially may create an uneven playing field for Saskatchewan producers competing in a global marketplace, Schwann says.
She further argues the province’s industry already has the highest environmental and safety standards in the world.
“This year, the market was quite good and we’re anticipating they will remain strong next year, but the big question is can we maintain our market share given our increased cost structure?”
The industry is on track to produce 21 million tonnes from the province’s 11 operating mines, she says. And growth is expected to continue globally at about 2 to 3 million tons per year.
Despite the growth, Schwann says many in the industry are concerned added regulations may harm Saskatchewan producers.
“Potash produced in Saskatchewan is done with 70 per cent fewer greenhouse gas emissions than our global competitors, so if we end up reducing potash production in Canada because of compliance with regulation to reduce greenhouse gases, all we’re doing is shifting that offshore where they can’t produce it as environmentally efficiently as we can.”
Still Halabura is among those in the industry who see opportunity amid more regulation thanks to innovation.
“There is this revolution going on in the industry.”
Halabura should know. He is also the CEO of Buffalo Potash Corp, another company proposing to use advanced solution mining techniques to extract high-quality potash used in custom blends of fertilizer that are in growing demand among North American farmers.
Current challenges aside, he notes the province is poised to grow into an even more dominant position globally because it produces a better product.
That’s especially important to agricultural producers in our own back yard and others seeking more advanced fertilizers that leave less by-product in the soil.
But more than anything, Mother Nature’s bounty simply favours Saskatchewan, Halabura says.
“This province has got so much potash still in the ground that if the province really puts its wheels to it we could really get the economy going.”
This story was created by Content Works, Postmedia’s commercial content division.