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

  • Lululemon shares drop after weak outlook

    Economic CBC News
    Shares of Lululemon Athletica Inc. fell sharply in after-hours trading Wednesday after the athletic-inspired sportswear company delivered a weak outlook for the current quarter. The Vancouver-based company says it earned $136.1 million US, or 99 cents per share, for the three months that ended Jan. Source
  • Cenovus Energy buying most of ConocoPhillips's Canadian assets for $17.7B

    Economic CTV News
    CALGARY -- Cenovus Energy (TSX:CVE) announced Wednesday it will spend $17.7 billion to acquire most of the Canadian assets of ConocoPhillips, making the Houston-based company the latest international player to reduce its exposure to the oilsands. Source
  • Cenovus Energy buying most of ConocoPhillips' Canadian assets for $17.7B

    Economic CBC News
    Cenovus Energy of Calgary says it will spend $17.7 billion to acquire most of the Canadian assets of ConocoPhillips, making the Houston-based company the latest international player to exit the oilsands. Cenovus CEO Brian Ferguson is calling it a "transformational acquisition. Source
  • Canadian coal production hit three-decade low last year as demand wanes

    Economic CTV News
    CALGARY -- The National Energy Board says Canadian coal production dropped to a three-decade low last year as demand waned. Production came in at 60.4 million tonnes, a 12 per cent decline since 2013, and well off the peak of about 79 million tonnes reached in 1997, the NEB said Wednesday. Source
  • Etihad Airways responds to laptop ban with free iPad and Wi-Fi for 1st class

    Economic CBC News
    One Middle Eastern airline targeted by new U.S. rules banning computers on certain flights has responded by offering first and business class passengers complimentary use of a tablet computer with internet access while on board. Abu Dhabi-based Etihad Airways made the announcement on Wednesday, noting that so-called Premium passengers will be welcome to use the service as of Monday. Source
  • Sask. premier invites Calgary energy companies to move to Saskatchewan

    Economic CBC News
    Saskatchewan Premier Brad Wall is taking a turf war with Alberta to its economic heart, inviting energy companies based in Calgary to move their headquarters to his province. In a letter to Whitecap Resources, Wall offers to subsidize relocation costs, trim taxes and royalties and help find space in unused government buildings if the oil and gas firm moves to Saskatchewan. Source
  • Etihad to lend U.S.-bound passengers iPads as ban workaround

    Economic CTV News
    DUBAI, United Arab Emirates -- One Mideast airline affected by the ban on most electronics in the cabins of U.S.-bound flights will lend iPads to its top-paying travellers. Etihad Airways said on Wednesday that it will offer the tablets to U.S. Source
  • Bombardier senior execs earned nearly 50 per cent more in 2016

    Economic CTV News
    MONTREAL - Bombardier's senior executives saw their compensation rise by nearly 50 per cent last year at a time when it laid off thousands of workers, sought government aid and saw the first CSeries passenger jet take flight. Source
  • Fact check: U.S. President Trump didn't get luxury-model Air Force One

    Economic CTV News
    KIRKLAND, Wash. -- A widely shared story that claims to include photos of a recently delivered plane that will serve as Air Force One for U.S. President Donald Trump is false. The pictures included in the story do not show the presidential plane and are conceptual renderings from an outfitter of luxury aircraft. Source
  • Manulife picks head of its Asia division as president

    Economic CTV News
    TORONTO - A relative newcomer to the senior ranks of Manulife Financial Corp. (TSX:MFC) has been picked to be the insurer's president, responsible for its global operations including Canada. Roy Gori, who joined the Canadian life insurance and wealth management company in early 2015, has been responsible for Manulife's Asia division. Source