Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
A sustained rout in potash prices pared with weak global demand for the fertilizer ingredient have forced Mosaic (NYSE:MOS) to idle production at its Colonsay mine, in Canada’s Saskatchewan, in a move that has left over 300 people out of work for the rest of the year.
The Plymouth, Minnesota-based company said the temporary shutdown will help it meet customers’ needs and reduce production costs. Mosaic added that 32 employees will remain employed for care and maintenance activities, and that it expected laid-off workers could come back in January 2017.
Mosaic will rely on its lower-cost Esterhazy and Belle Plaine mines for potash production as it tries to weather challenging market conditions for the fertilizer.
Colonsay mine, located about 65 kilometres southeast of Saskatoon, is one of Mosaic’s three Canadian potash operations. The other two —Esterhazy and Belle Plaine — were not affected by the company’s cost-cutting measure.
United Steelworkers Union representative Mike Pulak told CBC News the layoff notices were given just two days after its members voted down Mosaic’s latest contract offer, adding that the shut-down took most workers by surprise.
Mosaic’s senior director of public affairs, Sarah Fedorchuk, said the firm had been bargaining with the Colonsay union for over a year and that the decision to lay off the workers had nothing to do with the offer being voted down on Monday.
Mosaic is not the first producer to idle a potash mine this year. In January, PotashCorp (TSX, NYSE:POT) mothballed its new Picadilly potash operation in New Brunswick, dismissing more than 420 employees. A month later, it curbed production at its Saskatchewan operations.
Later, Intrepid Potash (NYSE: IPI) said it would close the high-cost West Facility in Carlsbad, New Mexico, in July, affecting about 300 employees.
Mosaic has set Jan. 3 as the restart date for the mine, but that may change based on market conditions. (Image from archives)
Comments
Altaf
Potash is no different from other commodities. All the commodities have turned up from lows. Not all at the same time. Some early, some later. Potash’s turn also will come.
The only factor not working for Potash until now is weak demand. With El Nino gone this year, demand will pick up and sunny days will return to producers.