Potash Corporation of Saskatchewan suspends N.B. operation, cuts 430 jobs

SUSSEX, N.B. -- Amid weak global markets for fertilizer, Potash Corporation of Saskatchewan shut down its Picadilly mine in southern New Brunswick for an indefinite period Tuesday, eliminating up to 430 high-paying jobs.

See Full Article

The company (TSX:POT), based in Saskatoon, Sask., said it must cut expenses by shifting its focus to lower-cost operations in Saskatchewan.

"This is a very difficult day for our employees and our company," PotashCorp. CEO Jochen Tilk said in a statement. "We understand the significant impact to our people in New Brunswick and the surrounding communities."

The move is expected to save the company up to $50 million in 2016, although these savings will be offset by $35 million in one-time severance costs.

The closure amounts to a major blow to the provincial government's efforts to turn New Brunswick's economy around.

Sussex Mayor Marc Thorne said the shutdown of the area's largest direct employer came as a shock to the town of 4,300.

"Those who have grown up here and gone to the mine for employment have been able to live a very comfortable lifestyle and raise families ... (so) we're going to be looking at a significant loss," he said in an interview.

"There will be no aspect of our community and region that won't feel the effects of this closure."

The mayor said the company had invested almost $2 billion over six years getting the mine ready for production, but equipment problems and challenges making caverns for tailings led to delays.

"We never expected, despite the delays and bad news, none of us anticipated full closure of the mine," he said.

However, the mayor said the delays did not prompt the closure. Instead, it was lack of demand from the mine's principal market in Brazil.

As well, operating costs for the new mine were expected to be roughly three times higher than in Saskatchewan because of the depth of the potash deposits, he said.

Still, Thorne said he expects the mine to reopen.

"I can assure you that PotashCorp didn't invest $2 billion in the last six years just to walk away."

About 35 employees will be kept on to maintain the idled facility near Sussex. Another 100 workers will remain in place through a four-month transition. Should the company decide to resume operations, it would take about a year to get it running again.

Dominic LeBlanc, federal Liberal House leader and senior cabinet minister from New Brunswick, admitted it will be tough for people in the Sussex area to find new jobs.

"The New Brunswick economy is in a particularly tough spot," he said at the conclusion of a federal cabinet retreat in Saint Andrews, N.B.

"We shouldn't underestimate the personal disruption and worry that this will represent for these hundreds of families. The Sussex economy largely depended on this global leader."

Federal Natural Resources Minister Jim Carr, who is from Manitoba, said people from the West are well acquainted with the economic pain caused by low commodity prices.

"As a government, we are committed to broadening in the long term our capacity to create jobs in the energy sector ... and New Brunswick is a very important part of that strategy," he said. "We in Western Canada understand the personal consequence of layoffs in this sector."

PotashCorp has been struggling to cope with weak markets for years. Cuts made in 2013 took out 3.5 million tonnes in potash production.

When the company reported a drop in quarterly profits and sales in October, it also announced it would permanently close its Penobsquis mine in New Brunswick, cutting 140 contract jobs.

The mine, adjacent to the Picadilly operation, was supposed to close in 2016 but the shutdown was moved up to November 2015.

At the time, PotashCorp said the Penobsquis closure would allow the company to ramp up production at Picadilly, a lower-cost operation.

On Tuesday, the company said more than 100 positions will be available for New Brunswick employees at its Saskatchewan operations, with funds being made available for relocation.

As well, a $5-million community fund will help former employees get skills training and provide support to local businesses and charitable organizations.

Bruce Fitch, New Brunswick's Progressive Conservative leader, issued a statement saying the closure is partially the result of a "toxic business environment" created by the Liberal government through increased business property tax and the highest income tax in North America.

"It is clear the Liberals have mismanaged the energy and resource sector," he said.

Customers traditionally served by the New Brunswick mines will now get their potash from the company's Canpotex operation in Saskatchewan, where volume is expected to grow by 750,000 tonnes.

The company is the world's largest supplier of potash, which is used mainly as a fertilizer. It also produces large amounts of nitrogen and phosphates, which are also used as crop nutrients.



Advertisements

Latest Economic News

  • Trump Organization to check out from Toronto hotel, condo tower

    Economic CTV News
    The entrance to the Trump International Hotel and Tower is shown in Toronto, Wednesday, Dec.9, 2015. (THE CANADIAN PRESS / Graeme Roy) Source
  • Draghi: ECB will be cautious in adjusting stimulus effort

    Economic CTV News
    FRANKFURT -- European Central Bank head Mario Draghi says the bank's stimulus efforts need to be "persistent" even as the economy recovers and that any scaling back of support will come gradually. Draghi's said in a speech Tuesday at an ECB conference in Sintra, Portugal, that "there are strong grounds for prudence" in adjusting the level of stimulus and that any withdrawal of stimulus "will have to be made gradually. Source
  • New Aussie Post boss will get half her predecessor's multimillion pay packet

    Economic CTV News
    CANBERRA, Australia -- The new boss of Australia's postal service will be paid less than half the 5.6 million Australian dollar (US$4.3 million) salary package that made her predecessor Australia's highest-paid public servant. Christine Holgate was named as the new managing director and chief executive officer of Australia Post on a salary of AU$1,375 000 plus a performance pay of up to the same amount, a government statement said Tuesday. Source
  • EU fines Google a record 2.42 billion euros

    Economic CTV News
    BRUSSELS -- The European Union has slapped a record 2.42 billion euro (US$2.72 billion) fine on internet giant Google on Tuesday for taking advantage of its dominance in online searches to direct customers to its own online shopping business. Source
  • Canada could use a $5 coin — and a lot less small change: Don Pittis

    Economic CBC News
    Foonie doesn't really work, so Canadians will have to put on their thinking caps to figure out a name for the $5 coin. As the loonie turns 30 this week, painful though it may be, we must inevitably begin to prepare ourselves to say goodbye to our blue Wilfrids. Source
  • Oilsands, mining companies watch B.C. solar project with intrigue

    Economic CBC News
    After a century of pulling lead and zinc from the Sullivan mine in southeast British Columbia, the energy company Teck recently shut down the operation and began years of restoration work. Some of the land outside the city of Kimberley became a meadow with grass and trees, but it remained tainted after decades of mining activity. Source
  • Several prospective jurors excused from Shkreli case over impartiality

    Economic CTV News
    NEW YORK - Several prospective jurors have been excused from the federal securities fraud trial of an ex-pharmaceutical company executive because they claimed they couldn't be impartial. Jury selection will continue Tuesday morning in Brooklyn. Source
  • Asian stocks move higher after mixed Wall Street result

    Economic CTV News
    SEOUL, Korea, Republic Of - Asian stocks were mostly higher in range-bound trade on Tuesday after Wall Street closed mixed. KEEPING SCORE: Japan's Nikkei 225 rose 0.3 per cent to 20,213.62 while South Korea's Kospi added 0.1 per cent to 2,391.33. Source
  • Global shares mixed, awaiting cues from central bankers

    Economic CTV News
    SEOUL, Korea, Republic Of -- Shares slipped in early European trading and were higher in Asia on Tuesday as investors awaited remarks by the U.S. and European Central Bank chiefs. KEEPING SCORE: Germany's DAX dropped 0.9 per cent to 12,657.32 and the CAC 40 of France lost 1.1 per cent to 5,240.43. Source
  • 'Like bombs': Bankrupt company's air bags still out there

    Economic CTV News
    Takata's lethally defective air bags proved to be the company's undoing Monday. But it could take years to get the dangerous devices off the road in the U.S. and around the world. Crushed by lawsuits, fines and recall costs, the Japanese auto parts supplier filed for bankruptcy in Tokyo and Delaware and will sell most of its assets for $1.6 billion to a rival company. Source