Dependence on China's Growth Not Path to Sustainability

By Jim Harding
No Nukes
September 26, 2012

Media coverage of Premier Wall’s recent trip to China was “dumbed-down”.  It takes courage to criticize an economy that is “doing well” in conventional terms. Conventional terms are exclusively about economic growth; not health, or justice, not human rights or the environment.

Once the global market becomes the political “be-all and end-all”, market-dependent politicians are inclined to simply follow the money, without a balanced consideration of outcomes, domestically or abroad. Surely governance and its reporting should involve more than cheerleading the hitching of our economic wagon to China’s totalitarian economic growth.

Saskaboom changing its tune?

By Paul Sullivan

Metro Regina
August 19, 2012

The news that Brazilian miner Vale is putting its multibillion-dollar potash mine on hold has sent a little ripple of concern across the brows of various Saskatchewan boosters.

It also reminds me of the ongoing dialogue between Captain Nemo and his hostage Pierre Arronax in Jules Verne’s classic novel 20,000 Leagues Under the Sea.

Nemo’s futuristic submarine Nautilus encounters everything from giant squids to sub-surface volcanoes, which the captain coolly dismisses as mere “incidents,” not the more severe “accidents.”

No Vale on the Plains?

By Erin Weir 

Progressive Economics Forum
August 19th, 2012

I had the following comments in yesterday’s front-page story on Vale’s decision to postpone its proposed $3-billion potash mine at Kronau, Saskatchewan:

Regina economist Erin Weir, who is widely expected to run for the leadership of the provincial NDP, said in a statement Friday that the Vale announcement “represents a failure of the Saskatchewan government’s approach of almost giving away the resource to encourage companies to dig it out of the ground as quickly as possible.”

“The silver lining is that Vale will not increase potash supply as quickly as expected. A tighter potash market likely means higher potash prices and even larger profits for existing producers,” he said.

What did not make it into print was my further argument that the provincial government should collect a better royalty return from those existing companies by ending the potash production tax concessions that proved ineffective in spurring Vale’s investment.

Another important issue is that Vale has been a rather poor employer in Canada’s mining sector. In 2009, it provoked a strike that lasted more than a year at its nickel mines in Ontario and Labrador.

In response, the Government of Newfoundland and Labrador established an Industrial Inquiry Commission, which made recommendations about how a small province could more effectively deal with large multinational employers.

The Government of Saskatchewan should use the time provided by the Kronau delay to consider these issues, so that our province does not have a similar experience with Vale if the mine is built

Mosaic Profit Argues for Higher Royalties

By Erin Weir 

Progressive Economics Forum
July 17th, 2012

Today’s Mosaic quarterly report provides further evidence that the Government of Saskatchewan should improve its royalty and tax structure to collect a better return on the province’s non-renewable resources like potash.

Quarterly Comparison

Despite higher potash prices, Mosaic paid lower royalties and resource taxes to Saskatchewan last quarter than in the same quarter of last year. In the three months ended May 31, 2012, Mosaic paid $100 million in provincial resource charges from over a billion dollars ($1,037 million) of potash sales.

By comparison, in the three months ended May 31, 2011, the company paid $108 million from only $982 million of potash sales. In other words, Mosaic’s royalty and resource tax payments to Saskatchewan declined even as the value of potash sales increased.

Reductions in provincial royalties and taxes were supposed to provide incentives for increased production. However, Mosaic actually mined less potash last quarter than a year ago (1.9 million vs. 2.2 million tonnes). The increase in sales values simply reflected higher prices ($455 vs. $404 per tonne).

Annual Comparison

The annual figures confirm that provincial royalties and resource taxes amount to only one-tenth the value of potash sold. In the year ended May 31, 2012, Mosaic paid $328 million to Saskatchewan from $3.3 billion of potash sales. In the year ended May 31, 2011, it paid $294 million from $3.1 billion of potash sales.

The amount of potash mined changed little from one year to the next (7.4 million vs. 7.3 million tonnes). The higher sales value instead reflected stronger potash prices ($448 vs. $359 per tonne). Windfall gains from higher commodity prices should accrue to the people who own the resource rather than to the companies that extract it.

Explanatory Note

Mosaic reports “Canadian royalties” and “Canadian resource taxes.” Since its Canadian potash mines are in Saskatchewan, these amounts represent the provincial Crown royalty and Saskatchewan’s resource surcharge plus potash production tax. There is an interesting breakdown on the second-last slide of Mosaic’s PowerPoint presentation.

Sask. potash producers facing U.S. anti-trust lawsuit

Global Saskatoon

Friday, June 29, 2012



A U.S. court has revived a lawsuit against some of the world’s largest potash mining companies.

The lawsuit names Saskatchewan producers: PotashCorp, Mosaic and Agrium, as well as four other international companies, accusing them of forming a “global cartel.”

U.S. purchasers of potash claim that the companies inflated prices of the crop-nutrient by internationally decreasing their output.

The plaintiffs say that prices rose 600 per cent from 2003 to 2008, even though American consumption of fertilizer remained steady.

"PotashCorp has both the policy and practice of adhering to any competition laws anywhere we do business, and that's certainly the case here as well, and these are claims that we will defend ourselves against vigorously when they do go before trial," said PotashCorp Senior Director Bill Johnson.

The lawsuit was resurrected by the seventh U.S. Circuit Court of Appeals, reversing the decision from last September.

Vale plans 40 million-litre-a-day water pipeline for potash mine in Saskatchewan

By Brent Patterson
Council of Canadians
February 2, 2012

Katepwa Lake

CBC reports that the Brazilian mining giant Vale plans to build a potash mine near the town of Kronau, Saskatchewan that would start operations in 2015. CBC notes there are concerns “about the mine’s environmental and social impacts” but highlights that large volumes of water would be needed to separate the potash from other minerals.

“As there is no water source near Kronau, Vale wants to build a 70-kilometre water pipeline from Kronau to Katepwa Lake in the Qu’Appelle Valley. The company wants to pump more than 40 million litres of water — the equivalent of 15 Olympic-sized swimming pools — out of the lake every day.”

“The provincial body that regulates Saskatchewan’s water supply is currently studying whether there is enough water to meet Vale’s request. People living in the Katepwa Lake area say they are concerned about the effects the mine — and the withdrawal of all that water — would have on not just their water supply, but on the province’s lakes. …Vale plans to host public meetings over the next few months about the Kronau proposal.”

Back in November 2010, the Globe and Mail reported, “Vale’s potash plans in Saskatchewan include a potash development project valued up to $3-billion, which is now in the pre-feasibility stage. A decision on whether to build a mine is expected in 2012.” It would appear that Vale has now opted to proceed with its plan.

Wall of Silence on Canpotex

By Erin Weir
Progressive Economics Forum
January 13th, 2012

Saskatchewan’s newspapers reported today that BHP Billiton intends to sell the province’s potash outside of Canpotex, the marketing board that helps to maximize the price for which Saskatchewan potash is exported offshore.

BHP executive Tim Cutt stated, “We will not market through Canpotex. We talked to the premier (Brad Wall) about that. He understands that.”

Concerns that BHP would undermine Canpotex were a major objection to its takeover bid for the Potash Corporation of Saskatchewan. Indeed, Premier Wall’s speech rejecting BHP’s proposal invoked “Canpotex” ten times in eight pages, as a source of pricing power for Saskatchewan’s resource and of jobs in British Columbia’s ports (as opposed to BHP’s plan to use the port of Vancouver, Washington).

It seems strange that Wall would now be happy to accept BHP’s plans to circumvent Canpotex. Maybe BHP is willing to develop the Jansen Lake mine only if it can bypass this agency? Perhaps the benefits of developing this new mine outweigh the costs of eroding Canpotex’s pricing power? If Wall has come to that conclusion, he should say so rather than allowing BHP to speak for him.

Three Sask. CEOs make top 100 list

CBC News
Jan 3, 2012

Three of Saskatchewan's top executives have made the list of the highest paid 100 CEOs in Canada, ranked by the Canadian Centre for Policy Alternatives.

The highest paid CEOs in Saskatchewan in 2010 are Potash Corp.'s Bill Doyle, Cameco's Gerry Grandey and Viterra's Mayo Schmidt.

Schmidt: Only $4,548,711/year

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Doyle was eleventh on the list with a salary of $11,601,796. Grandey was fifty-fifth making $6,826,500. Schmidt came in eighty-ninth with a total of $4,548,711 a year.
 

Grandey: Laughs to the bank

Though Doyle's salary didn't change much from what he was reported to have made in 2009, Grandey topped his yearly salary by more than $2-million, while Schmidt took a hit of about $200,000.

Doyle: Makes ends meet

The average CEO yearly salary in Canada was reported to be at about $8.38 million in 2010.

Ethical Potash in Norway: Canadian fertilizer blacklisted

Norway fund blacklists FMC, Potash over ethics

The Potash Blog

December 6, 2011

Norway's state pension fund, one of the biggest sovereign wealth funds in the world, has blacklisted investment in US chemicals firm FMC Corporation and Canadian fertiliser maker Potash over ethics concerns, Oslo said Tuesday.

"The companies' conduct represents particularly serious violations of fundamental ethical norms... The breaches result from the companies' purchases of phosphate from Western Sahara," the Norwegian finance ministry said in a statement.

Potash, which is the world's leading fertiliser maker, and FMC both buy phosphate from Moroccan company OCP, which extracts the mineral in Western Sahara, a disputed territory annexed by Morocco in 1975.

Resource Revenue should be kept in a Resource Fund

Green Party of Saskatchewan

December 2, 2011

The Green Party of Saskatchewan has a proposal for the responsible use of revenue from natural resources in the province. Party Leader Victor Lau says a minimum of 18 percent of resource revenue should be placed in a resource fund, similar to the Alaska Permanent Fund. Oil revenue is set aside in the Alaskan fund for future generations of citizens, and is used to provide dividends to the adult citizens of Alaska. Annual payouts to citizens have ranged up to $2,000 U.S. per person.

Lau likes the idea of a Resource Fund for Saskatchewan, because it preserves the benefits of our province’s growing economy for future generations, “Alaska is showing Saskatchewan the way, in terms of how resource revenue can be made available for all present and future Saskatchewan citizens.” Lau says, “Saskatchewan citizens own the natural resources in our province. Therefore Saskatchewan citizens have a right to enjoy the benefits of that ownership directly through a Guaranteed Livable Income."

(Read More)

Lau says the provincial government always needs to have enough revenue to ensure that the provincial budget is never in deficit. “By ensuring there is always enough resource revenue to balance the budget while eliminating poverty through a guaranteed income,  we move towards the goal of One Saskatchewan," states Lau. " Resource revenue is a blessing, not something our province should ever take for granted” says Lau.

Foreign Hackers Target Potash Corp. of Sask.

By Greg Weston
CBC News
11/29/11

A leading cyber-crime expert says foreign hackers who launched a massive attack on Canadian government computers last fall also broke into the data systems of prominent Bay Street law firms and other companies to get insider information on an attempted $38-billion corporate takeover.

Daniel Tobok, whose international cyber-sleuthing company was called in by a number of the firms hit by the attacks, says the hacking spree from computers in China were all connected to last year's ultimately unsuccessful takeover bid for Potash Corporation of Saskatchewan.

"All those different attacks on companies, law firms and government were all interconnected -- they weren't isolated incidents," he said in an interview with CBC News.

The Politics of Potash

By Erin Weir
Progressive Economics Forum

November 14th, 2011

Advocates of low potash royalties are claiming that New Democrats fared poorly in Saskatchewan’s recent election because they proposed higher potash royalties. Of course, potash companies and their boosters would like the NDP to give up this cause. Doing so would be a political mistake for the party and a disservice to the people of Saskatchewan.

Most polling indicates that most Saskatchewan residents support collecting more from potash companies. So, why didn’t the NDP get more traction on the issue? In politics, timing can be everything.

Unrest in Bill’s Republic of Doyle

By Erin Weir

Progressive Economics Forum

November 1st, 2011

PotashCorp CEO Bill Doyle

PotashCorp CEO Bill Doyle waded into Saskatchewan’s election campaign on Friday with an op-ed in the province’s two largest newspapers. It was accompanied by a paid advertisement from PotashCorp in Saskatoon’s StarPhoenix.

The company got some free advertising in Regina’s Leader-Post through Bruce Johnstone’s column, which repeated Doyle’s op-ed. The Saskatchewan Party is parroting the same lines.

In response to Doyle, former Member of Parliament and PotashCorp director John Burton has an excellent op-ed in today’s Leader-Post. I have the following op-ed in today’s StarPhoenix:

Sask Party Shills for PotashCorp

By Erin Weir 
Progressive Economics Forum

October 28th, 2011

Yesterday’s strong earnings report from the Potash Corporation of Saskatchewan confirms what this blog and the NDP have been contending: even modestly increasing Saskatchewan’s extremely low royalties on hugely profitable potash mines could fund substantially better provincial public services.

The Saskatchewan Party still refuses to review potash royalties. In a well-timed column, Greg Fingas developed the theme that this gift to potash companies is the provincial election’s most expensive promise.

Single desk for potash, why not wheat and barley?

By Ken
Canadian Wheat Board Alliance
Oct 11, 2011

Can someone explain why Premier Brad Wall, now standing for re-election in Saskatchewan, was passionate about his support for single desk selling of potash yet he can hardly lift a finger to support the majority of farmers who just voted for single desk selling of their wheat and barley?

At least Alberta is a little closer to deep water and has oil and the cattle feeding sector, but what does Saskatchewan have? A couple of potash mines that look pretty small by most standards, and a huge grain farming sector. Saskatchewan produces better than 60% of the wheat and barley the CWB markets each year.

For every dollar a farmer earns, he puts about eight dollars into circulation in the economy. Ending the CWB is estimated to remove between 500 million to one and a half billion dollars from the western economy, and most of that will come out of Saskatchewan.

If this does not become an election issue, more than just the premier have their heads in the sand.

Resource royalties: Re-examine the status quo

By John W. Warnock
The Leader-Post
October 3, 2011

There has been discussion recently about the rate of return the people of Saskatchewan receive for the extraction and sale of our non-renewable natural resources.

Unfortunately, our governments have not informed the general public on this issue. How does this province compare to other political jurisdictions that are dependent on resource extraction?

Commonly, the term "royalties" is used to describe the return to the owners of the resources, but all political jurisdictions use a variety of policy tools.

We can get a general picture of our situation by looking at the total effective rate of return in a few mining jurisdictions, using a model prepared by the World Bank:

New NDP Ad: Resource royalties

Imagine What We Could Do: If we raised resource royalties

Imagine What we Could Do
10/06/2011

The low-down on the low rates

Saskatchewan’s resources royalty rates are ridiculously low. As economist Erin Weir writes: “Every time I check the numbers, I am again shocked by how low they have fallen.”

The Potash Corporation of Saskatchewan (PCS), now American-owned, generated about $1.6 billion on its Saskatchewan potash mines in 2010. But it only paid $77 million to Saskatchewan in royalties.

It only “paid a nickel in provincial royalties for every dollar of gross margin it made on potash,” says Weir. In contrast, Saskatchewan used to charge potash royalty rates of 25 – 31 per cent less than a decade ago.

Click here to read: Raise Potash Royalties.

Remembering my friend Allan Blakeney

By Dennis Gruending
Pulpit and Politics
May 1, 2011

Dennis Gruending with Allan Blakeney

My friend Allan Blakeney, the former premier of Saskatchewan, died recently at age 85. There will be a public memorial in his honour in Regina on Saturday, May 7th. I describe him as a friend and he was, although I am aware that he had many friends of longer duration and also many admirers. I was an adolescent when he was involved as a young cabinet minister in giving us medicare in 1962. By 1971, when he became premier, I was a newspaper reporter and my specialty at the time was in covering agriculture, not politics. Later on I became a CBC Radio host and interviewed him on numerous occasions but did not know him well. His closer relationships with journalists were with some of the veteran political reporters. He played small chip poker regularly with a number of them over a period of years and he almost always left with the loot in his pocket.

He was a remarkably good premier even though the hand-pumping side of politics did not come easily to him. Although he liked people and was genial and quick witted in private, his public persona was one of someone buttoned up and cautious. He told me in an interview after he left politics that when he was premier he kept in mind the image of a giant reel-to-reel tape that was always recording. He did not want to commit any embarrassing bloopers that would threaten his government and its social democratic projects.

Fulton and Rasmussen on Potash

By Erin Weir

Progressive Economics Forum
April 3rd, 2011

I do not think anyone can disagree with the conclusion of Murray Fulton and Ken Rasmussen that Saskatchewan should “proceed with a thoughtful and deliberate process that ensures that the province is the long-term beneficiary of this asset.”

The provincial opposition is advocating a royalty review process to achieve that goal. The government and potash companies claim that the appropriate “process” is to simply leave royalties unchanged.

It would be interesting to know how Fulton and Rasmussen think that potash royalties should be structured. However, their recent StarPhoenix op-ed is more an attempt to clarify the debate. Unfortunately, it muddies several key points.