Mining and Heavy Industrial

POTASH Saskatchewan has the largest high-grade reserves of potash in the world. Potash was Canada’s leading mineral by value of mineral production and Saskatchewan accounts for more than 90 per cent of Canadian potash production from eight conventional and two solution mines.

Although the outlook for potash production is expected to rise, the industry is still struggling with weak prices. The entire industry is dealing with soft potash prices due to weak demand from China and India. Potash prices, which peaked at more than $900 per tonnes in 2008, are around $300 per tonne as producers grapple with increased capacity and floundering commodity prices. Forecasters predict that lower prices will have a lingering effect.

Although there have been short-term challenges, global population growth means the demand for food will rise in the long term. Longer term potash production is expected to rebound as the industry continues to expand capacity to meet farmer demand as lower priced potash becomes more robust. Demand for agricultural commodities will only increase because millions of people around the globe will keep on eating.

The prospect of changes to Saskatchewan potash tax and royalty structure create concern for the potash industry, as Saskatchewan has the highest royalty regime anywhere by comparison. Concerns are especially acute given the dip in global demand for potash.

K+S POTASH CANADA LEGACY MINE Construction of Saskatchewan’s first greenfield potash mine in four decades is cause for celebration. Building of the $4.25 billion solution potash mine site is expected to be operational by fall of 2016. Annual production is expected to be 2 million tonnes by 2017, ramping up to 2.86 million tonnes by 2023 and four million tonnes by 2034. The mine is located 58 kilometers north of Moose Jaw, near the village of Bethune.

K+S Potash Canada Legacy Mine’s parent company is K+S Group of Kassel, Germany, Europe’s leading potash company and the fifth largest potash producer in the world. The company says it is committed to the Canadian Legacy Project as an important corporate strategy for global competitiveness.

General contractor AMEC is building the mine and at times has as many as 2,000 workers on site. The mine’s work camp is located near the mine and houses the majority of workers. Once the mine becomes operational there will be supply chain opportunities for local companies, and local housing demand is expected to increase.

K+S will bypass Canpotex, the export company owned by Potash Corp., Agrium and Mosaic Company, and instead ship Legacy Project potash through a Port Moody, BC terminal the company is building in conjunction with Pacific Coast Terminals Co. Ltd.

K+S is one of Saskatchewan’s top employers. The company has started to fill operational jobs in the areas of trades and technologies, administration, management, and general labourers. Trade opportunities include industrial mechanics, instrumentation mechanics, electricians, pipefitters, welders, and power engineers. Production positions will be of interest to those with Grade 12 education and previous industrial experience. K+S will eventually employ approximately 325 operational workers on site. Since Moose Jaw is the closest urban centre to the mine, it is hoped that more than half of the mine’s permanent employees will choose to live in Moose Jaw.

MOSAIC BELLE PLAINE The company’s Belle Plaine solution mine east of Moose Jaw has approximately 300 employees; roughly 60 per cent live in Moose Jaw. Mosaic’s operational capacity has increased from 9.3 to 10.7 million tonnes per year in the year-over-year comparison, although Mosaic President and CEO Jim Prokopanko said “these strong potash sales volumes were more than offset by lower realized prices”.

CANADIAN SALT COMPANY LTD. The parent company is K+S operating the Belle Plaine plant, one of the largest producers of commercial and industrial salt in the North America. The company is primarily focused on the production of agriculture salt in the form of salt blocks for livestock, food grade salt, industrial salt for de-icing roads, and salt for water softeners. The Windsor Salt name is the company brand name for salt product sold in Canada.

YARA INTERNATIONAL The largest producer of granular urea in North America, this Norwegian-based company owns and operates a world-scale nitrogen production facility supporting the world’s ever-rising demand for food. The Belle Plaine plant has two main operating units, the urea plant and the ammonia plant producing 700 tonnes of UAN a day (nitric acid is a key component of this liquid fertilizer). Yara also produces roughly 1.1 million tonnes of urea per annum.

ON HOLD The Company’s 2012 plans for a $2 billion expansion were postponed due to the high cost of construction. Should that project proceed it would add approximately 100 new high quality permanent jobs to its current 130-person workforce.

ALPINE PLANT FOODS Alpine Plant Foods is the Canadian leader in seed placed liquid fertilizer with manufacturing facilities located near Belle Plaine. Alpine has established itself as the leader in the liquid fertilizer business in Canada. The company has significant investment in research and development, new technology and uses a leading manufacturing process.

TERRA GRAIN FUELS The ethanol plant opened in 2008 at a cost of $150M and operates 24 hours a day, seven days a week. The ethanol plant was recently purchased by Conexus (Credit Union), Concentra Financial and Farm Credit Canada from Just Energy. It uses leading edge technologies, including world-class quality control on all of the bio-fuel products produced.

The plant has been working at “over 100 per cent capacity” employing 45 workers. Terra Grain Fuels purchases approximately 15 million bushels of wheat from farmers within a radius of 160 kilometers of the plant every year. The plant produces 150 million litres of ethanol and 160,000 tonnes of dried distiller’s grain annually. In the past the plant has been challenged by high feedstock costs and lower ethanol prices.

MOOSE JAW REFINERY Gibson Energy operates its local plant and markets a variety of petroleum derived products including several grades of road asphalt and is currently a leading supplier of roofing flux. Gibson Energy purchased the plant in 2002, and at that time it produced between 8,000-9,000 barrels per day and was operational for only five months. Today it operates year-round producing 18,500 barrels a day over 340 days.

PROPOSED: TRANSCANADA ENERGY EAST PIPELINE Discussions continue on a $12B project called Energy East Pipeline Project to carry 1.1 million barrels per day of western crude from Alberta and Saskatchewan to refineries in Eastern Canada. The project is expected to go before the National Energy Board in early 2016 for approval and construction expected to start in 2017. A $600 million upland pipeline would link North Dakota to the Energy East pipeline. The company is still working through a multi-regulatory process seeking approval to convert existing natural gas pipeline to crude oil service and to construct new facilities. The project will create 14,000 direct and indirect full time jobs across Canada during development and construction. The pipeline is planned to be operational by 2020.

TransCanada is one of the continent’s largest providers of gas storage and is developing one of North America’s largest liquid delivery systems.

PROPOSED: ENBRIDGE LINE 3 Replacement Pipeline Public hearings are underway to build a 1,073 kilometers of new pipeline to replace the majority of Line 3 crude oil pipeline, and to decommission the majority of the existing Line 3 from Hardisty, Alberta to Gretna, Manitoba. The project will run northwest through Regina with potential for some spin-offs to the Moose Jaw area during construction.