FILE-- The Potash Corporation of Saskatchewan's Cory Potash mine is seen in Saskatoon, Sask., in this July 19, 2007 file photo. The board of directors of Potash Corporation of Saskatchewan Inc. has unanimously rejected a US$38.6-billion unsolicited takeover bid from BHP Billiton Ltd. PotashCorp says the board thoroughly reviewed the offer from the Australian company, which is worth US$130 per share in cash, and found it to be “grossly inadequate” and not in the best interests of its shareholders. THE CANADIAN PRESS/Geoff Howe
There was no good news on Tuesday for 440 Saskatchewan PotashCorp workers.
On Tuesday, PotashCorp announced it will lay off 18 per cent of its international workforce or 1,045 people. Of those, the Saskatoon-based company will lay off 440 people in Saskatchewan, which is 42 per cent of the total workers affected by the layoffs.
“It’s truly a global business and as such, we depend on demand and demand growth from around the world,” said Bill Johnson, senior director of public affairs for PotashCorp. “Over the last five or six years, demand growth in places like China and India and some other parts of the developing world has frankly come slower than we anticipated it would.
“We were staffed on the potash side to produce at a level that the market wasn’t buying at and so we’re not producing any less potash than we did five years ago, but we’re also unfortunately not selling a whole lot more.”
Maeghan Dubois, communications specialist at K+S Canada, said the K+S Potash’s Legacy Project, located about 50 kilometers north of Moose Jaw, will move ahead as planned despite the current potash market conditions.
“K+S Potash Canada is mindful of the current state of the potash industry. However, we are committed to the Legacy Project, our solution potash mine located near Bethune. K+S Potash Canada is a subsidiary of the K+S group in Germany and they consider the Legacy Project an important cornerstone in the group’s successful future development,” she said. “We are committed to the long-term development of the project despite current potash prices.”
She added there was some “uncertainty in the market,” but that will not affect any long-term plans.
“Potash remains a fundamental resource required to feed the world’s growing population,” said Dubois. “So it’s really about the long-term for us.”
Sarah Fedorchuk, public affairs manager at The Mosaic Company, said in response to the PotashCorp layoffs, the company has no comments other than to say Mosaic does not have “any plans to follow suit.”
“We always monitor conditions and align our resources for what’s happening short-term, but also what’s happening with long-term demand,” said Fedorchuk. “We are always remaining cross-competitive in the global market … It’s definitely a tough market right now, but we do believe in the long-term fundamentals of the business.”
According to The Canadian Press, PotashCorp said the averaged realized price for potash to $307 per tonne in the third quarter of 2013 from $429 per tonne in the same time period in 2012.
PotashCorp will shut down one of the two mills in Lanigan by the end of 2013. In Cory, the production is being reduced and some administrative jobs will be cut back in Saskatoon.
“It’s pretty much right across the board,” said Johnson. “I would say as well that as significant as the cuts are in Saskatchewan, they’re equally as significant at our other operations — our phosphate operations in North Carolina and Florida and some of our nitrogen operations in the U.S.”
The company will also lay off 130 people in New Brunswick, 350 people in Florida, 85 workers in North Carolina and 40 workers in other locations in the United States and Trinidad.
“There’s a voluntary component to the cuts in Canada. So we’ll see who steps forward,” said Johnson. “Certainly it’s our hope that many of the reductions will be voluntary or early retirements, but come the new year, there will be involuntary reductions.”
The lowest-cost operation of the company in Rocanville will continue its expansion as previously planned. According to The Canadian Press, the company will pay out approximately $70 million in severance to affected employees.
“We will be well-positioned to supply the world with fertilizer when it re-ignites that (potash) demand growth,” he said. “We believe in the fundamentals of our business, but in the interim we’re having to make some difficult but necessary decisions to ensure that we remain profitable and healthy in the long-term, as well as the short-term.”
In a release, Premier Brad Wall said the provincial economy is still strong despite the PotashCorp layoffs.
“Obviously, this is not good news for those employees and their families,” he said in the release. “We will be immediately dispatching our rapid response teams to provide support and explore other opportunities in other sectors. We are fortunate that this has occurred at a time of relative labour market strength and that our economy today is more diversified than ever. Our economy is strong enough to absorb this kind of job loss.”
The release said provincial potash revenue accounts for 3.5 per cent of the $11 billion-budget. When the government took office, potash revenue was four per cent of total revenue in the 2007 budget.
Follow Lisa Goudy on Twitter @lisagoudy.