A glance at Saskatchewan Potash mining

Saskatchewan might not at first seem like a province that can build itself up as a preeminent world-class supplier of any resource. The population is only 1 million, spread out over a large area, and the climate has inhospitable extremes in the summer and winter. Yet Saskatchewan has built itself up as a leading supplier of a rare-earth salt called potash. Potash is essentially a water-soluble potassium-rich mineral that is often combined with chloride or carbonate, and it has settled in abundance underneath the sedimentary platform that defines the geology of Saskatchewan's prairie-lands. The industrial heart of the province has utilized this abundance to strike at rich in a world market where potash is an excellent & cost effective fertilizer for crops, and markets in India, China and Brazil have made it lucrative for the monopoly that Potash Corp. has created.

Why is Saskatchewan so rich in potash? 

That question can be answered by looking at the historical geology of the province. During the Devonian period 390 million years ago, southern Saskatchewan was inundated by a restricted inland sea. The equator was also located close to the province, thus the conditions were ripe for evaporation of water in the ancient sea, and thus the leftover mineral content collected and formed what are called evaporite beds. These beds were subsequently covered by later horizontal sedimentary deposits. The capping layers were not too thick, on the order of a thousand meters, thus drilling and mining access to the potash using modern techniques is cost & technically feasible.
World potash reserves, top ten states (left); cross-section of Saskatchewan strata with sylvinite beds (right)
Types and uses of Potash

Potash occurs when Potassium binds with another compound or element to produce a salt. Such compounds include Potassium Chloride (KCl), Potassium Sulphate (K2SO4), Potassium Carbonate (K2CO3), and Potassium nitrate (KNO3), all of which have varying uses and grades of quality. Potash has general uses as a bleaching agent, a soap, and a de-icer, and technological uses in computer screens, but the majority industrial use of the compound is as a fertilizer of plant crops. The variations of potash mentioned above are all effective as fertilizers, because plants soak up the nutrients provided by potash when they are dispersed and allowed to percolate into the soil (after being soaked by irrigation). Potash's water-solubility allows this to occur effortlessly, and thus crops will soak up the nutrient content as they soak up water.

Not many countries produce and export commercial-grade potash, and Canada is by far #1 among the ones that do. Importers tend to be heavily populated countries that rely on extensive agriculture to feed their people.

History of potash mining in Saskatchewan

Potash mining in Saskatchewan is currently driven by a former crown corporation, now private company, called Potash Corp.. The company is thoroughly overseen by the government of Saskatchewan, as the industry is key to the vitality of the province, which has had problems migrating out of the primary sector into manufacturing or service sectors. Potash Corp's vision, as stated on their corporate website, is to “play a key role in the global food solution while building long-term value for all our stakeholders”. Potash Corp. and the government of Saskatchewan have promoted themselves as having enough potash fertilizer to supply the world for over a hundred years to come, and that has been confirmed by geological explorations by the Geological Survey of Canada. PCS operates six mines in Saskatchewan: Allan, Cory, Lanigan, Patience Lake, Rocanville and Esterhazy. See map below (Fig 2.1) for locations of the sites in Saskatchewan.

Potash Corp. has outlined a distinct list of events since they became privatized in 1989. Below are a sampling of what has evolved in the company during the last two decades ($ is $USD):
  • 1990 - Acquired Saskterra and its 40 % interest in the Allan, Sask. potash mine from Husky Oil Ltd. for $47M
  • 1993 - Purchased the potash assets of Potash of America, a mine and mill in Saskatchewan and a mine, mill and port facility in New Brunswick, from Rio Algom for $111.8M
  • 1995 - Created PCS Phosphate by purchasing all outstanding shares of Texasgulf Inc. for $832.6M
  • 1998 - Purchased 9% of the shares of Israel Chemicals Ltd. from the Government of Israel for $93M. ICL owns Dead Sea Works, 5th largest potash exporter. Also acquired all outstanding shares of Potash Company of Canada for $11.4M
  • 2003 - Acquired 26% of Arab Potash Company Ltd. shares for $178M
  • 2005 - Previous idled capacity at Rocanville plant brought back to full. Idled capacity at Allan plant expected to be brought back to full as well. Purchased an initial 10% stake in Sinofert Holdings Limited, largest importer and largest integrated distributor of fertilizer products in China, for $97.4M. Acquired additional $18.5M of APC shares, raising total ownership interest to 28%
  • 2006 - Purchased additional 7%of SQM for $231.5M, raising total ownership interest to 32%. Purchased additional 10% of Sinofert for $126.3M, raising total ownership interest to 20%
As you can see, the organization has been flexing its corporate muscle on the world fertilizer stage buying out smaller competitors, staking large shares in bigger competitors, and diverting a lot of profit towards increasing production capabilities at home and abroad. This list shows an almost tangible will of Potash Corp. to completely monopolize the potash industry worldwide. They are easily ranked as #1 in volume and capital.

The early Crown Corporation years of Potash Corporation of Saskatchewan

For over 40 years, potash has played a significant role in Saskatchewan's economy. Potash was first found in Saskatchewan in 1942 during oil derrick drilling. Throughout the 40's and 50's, geology explorations found extensive evaporite deposits of potassium salts in the same strata as the oil-bearing shale. Using more modern techniques, it is estimated that southern Saskatchewan has over a 100 billion tonnes of potash reserves, with the majority accessible using current technical means. Potash deposits are concentrated near Saskatoon, and extend through much of the central portion of the province. Plant mining operations are located in the vicinity of many greater Saskatoon small towns where potash-bearing ore is layered 2-4 meters thick at about 1000 meters depth.

Esterhazy, Saskatchewan was the first commercial-level mine built in the late 1960's (see map 2.1). Other companies foresaw the lucrative opportunities these salts brought, resulting in a total of nearly a dozen mines opening by 1970. However, this expansive growth was not matched by market demand, a problem similarly felt by other industries in Western Canada & BC. The government of Saskatchewan needed to step in and essentially “bailout” the companies that were in the red. This action started a snowball effect, where the government pressed its agenda for the potash industry onto the private companies. Many small companies refused to pay taxes & levies the provincial government instituted. The government responded to those refusals on November 1975 by acquiring ownership of a large part of the potash industry in the province. Thus the Potash Corporation of Saskatchewan was born, a crown corporation that started with ownership of four key mines (40% share of provincial industry). The government could write its own ticket in terms of favorable legislation and subsidies, and this allowed the potash industry to grow, and by extension the provinces GDP.
Southern Saskatchewan potash mining plants plus untapped deposits
Throughout the mid-80's the growth & advancement of Potash Corp. was hampered by a dithering provincial government. The market strategy tied to growth stagnated, and heavy financial losses occurred that drove the company downhill. This lead to the sale of Potash Corp. in 1989 to private interests. Under private auspices, PCS diversified its fertilizer portfolio to include nitrogen and ammonium products, whilst still having potash as its strong foundation. As noted above, since privatization, a strategy of monopolization of the global fertilizer industry is the key direction of Potash Corporation of Saskatchewan at present.

Other agencies involved in Saskatchewan's potash industry

The story of Saskatchewan's potash industry is not limited to Potash Corp., smaller potash companies, and the provincial government. Indeed, there are co-operative organizations that have a stake in the practices the industry conducts, in terms of both the economic well-being of citizens and the safety & health of the environment and its inhabitants. Looking first at environmental action groups, Saskatchewan has several that have expressed interest in the health of ecosystems affected by potash mining and ancillary operations:

1. Saskatchewan Ministry of Environment - “manages diverse landscapes and renewable natural resources in a manner that supports a healthy environment, a growing economy and strong, vibrant communities.” Environmental assessments conducted by the ministry on an annual basis are thorough in reviewing the effects of potash mining upon ecosystems in terms of hydrology, pollution concerns, biological diversity, airsheds, and carbon emissions.

2. Earthworks - non-profit organization dedicated to protecting communities and the environment from the destructive impacts of mineral development. Through MiningWatch Canada, there is a push to reform mining practices in Saskatchewan's potash industry, which includes more closely monitoring pollution of air & watersheds in the mining areas, ensuring technical efficiency, and including the voice and employment of First Nations people.

3. Saskatchewan Environmental Society - non-profit, registered charity whose mandate is to work towards a world in which all needs can be met in sustainable ways. “Sustainability will require healthy ecosystems, healthy livelihoods and healthy human communities.” The concerns of the SES in relation to potash mining include the chemical contamination of the shrinking provincial water resources, and the destruction of critical species habitats involved in mining expansion.

Those are but a sampling of key environmental organizations involved in the province. Each region, and sometimes each city/town has groups that oversee ecological impacts upon the localized environment by potash mining. Also, there are First Nations groups (ex. Whitecap Dakota, Muskowekwan, First Nations Indian Federation) that are intertwined with the potash industry in the province. In previous years, concerns over the lack of native representation in the potash workforce were brought to the forefront, as well as deal brokering that would see First Nations treaty groups investing in certain potash operations in a co-operative with private potash companies. One such example involves the Encanto Potash Corporation signing a development agreement with the Muskowekwan First Nations to build a potash mine on their lands to the northeast of Regina. “It is good for our community, it is good for our First Nation, and it’s good for our future,” said Chief Reg Bellegarde after signing the deal. The mine would cover a 43,000 acre region, creating almost 300 jobs and generating a 3% royalty for the Muskowekwan. 

Natural Resource Management approach to Potash mining

As you can see from the above example of a First Nations group working together with a private company, a participatory approach is the most often used approach to managing the extraction of potash, and economic development & environment oversight are also part of the equation. The participatory approach involves many elements and organizations working together towards a common goal, which could be lofty or specific. The major facets of the participatory approach when it comes to potash mining involve the following participation’s:

Combining knowledge of geologists with environmentalists, engineers, and First Nations
  • The mutually agreed arrangement between these organizations to achieve a jointly determined goal or objective for the benefit of the environment and society involves the tailoring of potash mining operations to avoid environmental impacts using no-trace-left-behind policies, and to having profits made on the international market shared with First Nations and the local communities where mines are installed.
  • Conflict is minimized by involving environmental societies and First Nations groups in the potash mining process. Environmental societies can monitor pollution issues; First Nations workforce can be trained and employed, plus their expert knowledge of the landscape can lead to new potash-bearing deposit finds (First Nation elders have a statistically significant expertise when it comes to prospecting for mineral wealth).
  • During difficult economic times in potash mining in Saskatchewan, government funding and legislation has intervened to keep the industry viable. We are seeing something akin to that now, as attempts at international hostile takeover of potash companies are being stopped by First Nations treaty organizations, whom step in to support the industry for the good of the provincial economy & local communities (ex. Whitecap Dakota FN collaboration with banks & investors to prevent BHP Billiton takeover of Potash Corp.)
The selection above highlights the key players, the Active & Inactive Public, along with the 5 key components of participatory management (Information sharing, Public feedback, Dialog between groups, Consensus among stakeholders, Consensus on direction). Power imbalances have been ironed out in the 21st century, as in the 20th century First Nations groups had little say, but now legislation plus their inclusion in driving the direction of Saskatchewan potash mining has made them nearly equivalent in clout to the private potash companies & the provincial government. The only real drawback, that is being worked on in fits & starts, is ensuring that the economy of scale needed to maintain a world-renowned fertilizer industry is managed in these globalized times, even during tough economic times. Seeing the recent history of Potash Corps acquisitions of shares (listed in History of Potash mining in Saskatchewan section above), there is some optimism to be seen in keeping the potash industry's head above water.

Environmental Impacts of Potash Mining

Relatively new publications have been spearheaded by the United Nations Environment Program & the International Fertilizer Association, and they look into the impacts on the environment by deep shaft mining of potash beds. The publications scrutinize the practices of the industry in Saskatchewan in regards to environmental monitoring and pollution handling. The effects that have been detailed include site-specific factors of mining upon the topography, climate, hydrology, and biochemistry of the surrounding ecosystem. Finer details look at the machinery methods, purification chemical processes, waste disposal, and infiltration of industrial runoff into unconfined aquifers.

The Saskatchewan Ecological Network has beautifully summarized many points of potential & existing effects on the environment resulting from potash mining. Below are a sample list:

Mine Development Phase (exploration, assessment, planning and construction)
o Land surface disturbance
o Air emissions
o Water contamination
o Noise and vibration

Extraction Phase (overburden removal or ore body access and ore extraction)
o Land surface disturbance
o Water contamination
o Water table lowering
o Air emissions
o Topsoil degradation
o Vegetation and wildlife disruption
o Noise and vibration

Ore Handling and Transport Phase (storage and reclamation)
o Air emissions
o Water contamination
o Noise and vibration

Refining Phase (crushing, grinding, separation, contaminant removal, drying, compaction, granulation)
o Waste generation
o Water consumption
o Water contamination
o Air emissions, including CO2

Waste Disposal Phase (storage impoundments and piles, underground backfilling, deep well injection)
o Land surface disturbance
o Water contamination
o Air emissions
o Aesthetic changes
o Waste

Decommissioning Phase (removal of equipment & plant, shaft sealing, stabilization)
o Long term stability issues
o Safety issues
o Future land use issues
o Air emissions
o Hazardous waste disposal

This detailed list of factors is overseen by the Saskatchewan ministry of environment using an annual inspection regime. Also, many potash mining companies operating in the province invite environment partnerships into their facilities to show them what they are doing to avoid contamination, reduce waste, rejuvenate the environment, etc... but the authenticity of the findings during these visits is questionable at best, as environmentalists see them as nothing more than guided tours that avoid showing negative aspects and pollution to environmental inspectors. A method involving a “secret investor” has an environmental inspector going undercover, allowing them unprecedented access and information in facilities that would otherwise be hidden from them if they were honest about their position and intentions when visiting potash facilities.

Potash mines are more finite in the ecosystems they effect (except for groundwater), so managing the short & long term impacts is quite feasible. In regards to groundwater, the mapping of geologic units within the mined area is usually done by the provincial branch of the Geological Survey of Canada, but that is usually a very baseline mapping job. Hiring a hydrogeologist to do a thorough examination of all units that will be altered by potash mining is important, as the company + stakeholders can make a better judgment of how the fluid dynamics will operate in the strata environment, and thus how soluble & insoluble pollutants will interact and disperse into groundwater systems. This is best conducted after shaft drilling and atrium formation is completed at the base of drilling operations.

Future Development & Market Plans

Potash Corp. always outlines short & long term goals for their company, available to be perused by investors and the public on their website. Most of those goals involve investment and profit margins, as well as expansion plans and community involvement opportunities. To give an example from Potash Corp's 2010 goals:
TARGET
Remain in the top quartile of governance practices as measured by predetermined external reviews
Our governance practices grow from our core values. By listening to and being accountable to our shareholders, we build trust and support, which enhances our ability to execute our strategies. 

ACHIEVED
We ranked in the top quartile in all predetermined reviews

Their operational goals are similar to other smaller potash company operation goals, and they include providing good ROI for shareholders, cornering the fertilizer market abroad, building relationships with local communities where mines/processing plants are located, furthering business contacts with talent-driven peripheral organizations, and protecting & remediating the environment where operations are conducted. It remains to be seen whether specific, quantifiable measures to achieve some of these long term goals will ever come about, especially in regards to environmental concerns and community involvement.

Balancing all the elements in the potash industry will be a challenge for all the major stakeholders, but the future of the industry is looking bright in terms of integrating participants in a thoughtful manner, along with taking a deeper look at environmental issues. The only missing piece of the puzzle is consideration for diversification: Saskatchewan has been stuck in a loop of relying on primary sector industries without looking towards other sectors. Investing primary sector gains in secondary or tertiary sector industries needs to be on the provincial agenda. Then and only then will a more stable growth in population occur, and not a transitive one.
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