From The Ground Up – Saskatchewan’s potash mining industry is providing prosperity and security for the province’s communities

January 7, 2013

7 - Photo- Legacy Layout

Casual visitors to the southern portion of Saskatchewan cannot help but note that agriculture is of vast importance to the province.  Clearly, they understand that the expanses of vibrant earth combined with adequate moisture, long hours of sunshine, and a knowledgeable agricultural community have allowed Saskatchewan to become, in familiar words, the “breadbasket of the world.”  But, they are missing one ingredient.

In order to make those fields truly productive, one additional product is necessary and that product is fertilizer.  As it turns out, Saskatchewan is blessed with the world’s greatest storehouse of fertilizer’s key component – potash – and in the industry’s 50-year history, Saskatchewan potash production has been of immense economic and social importance to the province.

The great economically mineable deposits of potash stretch across a span from just west of Saskatoon near the Alberta border southeast to near the Manitoba border and beyond.  These deposits of potash-bearing ore are generally about seven to 11-feet thick and are to be found 3,000 to 3,500 feet underground.  There are other deposits further to the south, but they are at even deeper depths, and impossible to mine economically based on present technical knowledge.

Most of these deposits are in the form of potassium chloride and, at present, those which are recoverable are estimated to amount to over 100 billion tons.  Ninety-five per cent of recovered potash is used for fertilizer and the remaining five per cent is utilized in other industrial applications.

Potash deposits were originally discovered in 1942 during at-depth oil exploration.  Specific drilling for potash uncovered vast deposits but a serious problem developed.  The potash could only be recovered from such depths by sinking shafts down to the deposit levels, but three major efforts of the 1950s encountered severe water problems.  Finally, in 1962, the International Minerals and Chemical Company (later Mosaic Holdings) discovered methods of overcoming water problems in their projects near the town of Esterhazy.

With the water problem now under control, a burst of activity spread across the deposit-rich areas and a dozen companies combined to successfully open 10 mines.

Unfortunately, the combined capacity of the new mines exceeded market demand and a period of chaos ensued as several companies were threatened with closure.  The Province of Saskatchewan then stepped in and purchased four of those mines while adding a productive portion of another and combined all those holdings into a Crown Corporation named the Potash Corporation of Saskatchewan.  However, the province did not wish to remain in what had been a private enterprise realm, and in 1988, the privatization process was begun, ending in the creation of a private entity with the identical name, Potash Corporation of Saskatchewan (PCS), which began trading on the Toronto Stock Exchange in 1989 under the symbol “POT.”

During the two decades since formation, PCS has consolidated many potash holdings and is now the dominant producer within the province.  Since their founding, the company has acquired 10 mines distributed within the productive arc with six between Lanigan and the Saskatoon area; three near the towns of Esterhazy and Rocanville; and one in the vicinity of Belle Plain, itself located between Regina and Moose Jaw.  To date, over 230 million tonnes of Potassium Chloride have been produced and employment within the industry has reached more than 3,000 jobs, many of them high-wage positions.

PCS has been engaged in expanding their potash mining operations and has put into effect a major expansion plan which will see total investment of $7.5 billion committed to several important projects.

Obviously, the economic impact of such ongoing large ongoing operations, combined with major expansion in area towns, has been significant and, for the purposes of this article, we will examine three such communities; Rocanville, Lanigan, and Esterhazy.

Rocanville is a community of about 1,000 located just above the Trans-Canada highway a few kilometres from the Manitoba border.  Aside from the normal attributes of “a good town to raise children,” Rocanville enjoys two unique distinctions.  First, the town was the site of the Seymour Oiler Factory which produced over one million oil cans during the Second World War.  As a remembrance to that era, the community now possesses the largest oil can in the world.  The other odd fact is that Rocanville is the home of the famous “crop circles” which became the subject of world-wide attention in 1996.

The Rocanville potash mine is wholly owned by PCS and is located 16 kilometres northeast of the town.  Production of potash has seen a steady increase since the mine’s original opening from barely 300,000 tonnes per year (t/y) to a present capacity approaching three million t/y.  In 2007, PCS announced a major expansion at the mine and mill and with a projected investment of $2.8 billion, capacity is expected to grow to 15.7 million t/y upon completion in the relatively near future.

Ore is presently accessed through two shafts to the 1,000 metre level and the company utilizes a long room-and-pillar method of mining.

The favourable economic contribution of PCS to the town can be measured by the average annual household income of better than $50,000 per year, unusually high for a small agricultural community.

Lanigan is a community of 1,300 located in central Saskatchewan along the Yellowhead Highway, mid-way between the Alberta and Manitoba borders.  Like Rocanville, Lanigan is also a family town and is known to have one of the lowest crime rates in all Saskatchewan.  Their economy is based on two industries; the largest feed lot and ethanol plant in Canada, and being home to one of the world’s largest potash mines.

PCS’s expansion plans for the Lanigan mine were brought to a successful completion in 2008.  Based on an investment of $420 million, the company’s de-bottlenecking and compaction expansion program was brought in on schedule and on budget.  The project plan was to bring additional production of 1.5 million tonnes on stream and involved the refurbishment of a mill which had sat idle since the mid-1980s.   This expansion program has allowed the annual production at Lanigan to increase to about 3.4 million tonnes per year.

One unique measure of the company’s contribution to the town of Lanigan is the fact that one of their major annual events is the Potash Corporation’s Fireman’s Rodeo, held during September.

Esterhazy is a slightly larger community than either Rocanville or Lanigan, with a population of about 2,500 and serves as a retail trade centre for a larger population.  While the potash industry is of some importance to several communities, in Esterhazy it is a major source of the community’s economic strength as there are two major Mosaic Holdings mining projects which now constitute the largest such operations on earth.  Expansion plans are now underway to add a third mine with perhaps a fourth being constructed in the next few years.  In addition, Esterhazy is home to Saskatchewan’s Potash Interpretive Centre.

Mosaic’s potash production is presently focused on the K-1 and K-2 Mines which are now producing at a rated capacity of 5.3 million t/y.  The company is now in the process of a major expansion which will bring K-1 and K-2 total production to over seven million t/y and they are also in the process of constructing a new mine K-3, which will add another one million t/y upon completion.  There are plans further down the road for construction of yet another mine, K-4.

Mosaic is making a major contribution to the area’s economy as hundreds of workers are currently employed in various expansion construction projects and the number of steady jobs at the various ongoing mining operations now numbers about 1,300.

There are many other Saskatchewan towns which are benefitting from this dynamic industry, including places such as Allan, Patience Lake, Watson, Belle Plain, and Cory.

Aside from being major contributors to the province’s prosperity, potash industry miners are also endeavouring to be good corporate citizens by contributing to the facilities and activities of their towns; developing effective mine waste management projects, and being solid stewards of the environment.

Despite periodic blips, the overall trend in demand for fertilizers is growing along with increases in the world’s population, as well as the need for fertilizers to replenish the vitality of soils which have been over-cultivated for generations.  Thanks to such demand growth, it is estimated that total investment by Saskatchewan’s potash mining industry will amount to $50 billion over the next two decades.

The province is on a resource roll – and potash is making a sizeable contribution to that growth.

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