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Saskatchewan Mining

Budget upsets potash producers – by Bruce Johnstone (Regina Leader-Post – March 19, 2015)

http://www.thestarphoenix.com/index.html

Sask. to gain, industry to lose

A change in the province’s potash royalty regime in the 2015-16 budget will net the Sask. Party government $150 million this year, Finance Minister Ken Krawetz announced Wednesday. The government also promised to revamp the province’s complex potash royalty scheme in consultation with the industry over the next year or two.

But the province’s biggest potash producer indicated the royalty change will negatively affect earnings and amounts to “changing the rules midstream.’ The budget said changes will be made to the Potash Production Tax “to defer the timing of capital deductions in order to prove an immediate and temporary increase in revenue from potash companies. The total amount of deductions producers received from their capital spending will now be utilized over a longer period of time.

“This is an interim step that will be followed by a review of the entire potash royalty and taxation regime.’ Krawetz told reporters that the government has held “ongoing consultations with the potash industry’ about the impact of the changes.

“After these smaller changes that we’ve been working on for a number of months, there will be a broader review over the next year or two. We want to ensure that the people of Saskatchewan who own the resource are rewarded at an appreciative rate,’ Krawetz said.

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What Saskatchewan is doing right to attract mining investment – by Ravina Bains and Taylor Jackson (National Post – March 18, 2015)

The National Post is Canada’s second largest national paper.

“Furthermore, Saskatchewan has taken ownership of the consultation process; the provincial government
makes it very clear that it, not project proponents, is “responsible and ultimately accountable for
managing and implementing the duty to consult.” Saskatchewan is also home to innovative mining
partnerships between First Nations and resources companies. For example, Muskowekwan First Nation
and Encanto are undertaking a joint venture to develop the first on-reserve potash mine in Canada
that will generate 2.8 million tons of potash annually and create approximately 1,000 jobs.”
(Ravina Bains and Taylor Jackson)

The mining industry contributes mightily to Canada’s economic prosperity, adding $54 billion to Canada’s GDP and employing roughly 383,000 Canadians at an average annual salary of more than $110,000 in 2013.

But Canada has a serious problem with land-use certainty that may threaten future investment in the sector. Across the country, uncertainty surrounding disputed land claims remains a significant barrier to investment in the development of natural resources, particularly investment in the mining sector.

For example, every year the Fraser Institute surveys miners around the world to determine what makes a jurisdiction attractive — or unattractive — to investment. According to the most recent survey, in eight out of 12 Canadian provinces and territories in 2014, uncertainty over disputed land claims was the top barrier to investment.

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Fipke, Ulansky take uranium hunt outside the Basin – by Tommy Humphreys (Ceo.ca – February 24, 2015)


 

http://ceo.ca/

Chad Ulansky cut his teeth on Ekati, Canada’s first diamond discovery, but it’s uranium that he’s hunting for now in Canada’s frozen North.

The Kelowna geologist is president and CEO of Northern Uranium (TSXV:UNO), which is exploring in northwestern Manitoba just beyond the eastern edge of the prolific Athabasca Basin.

Ulansky got his start as a geologist with Chuck Fipke’s Dia Met Minerals, which discovered Ekati, Canada’s first diamond mine, at Lac de Gras in 1991. The discovery by Fipke and Dia Met partner Stu Blusson, which came after years of systematic exploration, rocked the global diamond industry and sparked the biggest staking rush since the discovery of gold in the Klondike.

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NEWS RELEASE: The Fraser Institute: Saskatchewan Ranks First in Canada and Second Worldwide in Annual Global Mining Survey; Ontario and B.C. Slipping

www.fraserinstitute.org

Click here for full report: http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/survey-of-mining-companies-2014.pdf

CALGARY, ALBERTA–(Marketwired – Feb. 24, 2015) – Saskatchewan is the most attractive jurisdiction for mining investment in Canada, according to an annual global survey of mining executives released today by the Fraser Institute, an independent, non-partisan Canadian policy think-tank.

The Fraser Institute Annual Survey of Mining Companies, 2014, rates 122 jurisdictions around the world based on their geologic attractiveness and the extent to which government policies encourage exploration and investment. Saskatchewan ranks as the top jurisdiction in Canada and finishes second worldwide behind Finland.

“In addition to being blessed with an abundance of mineral potential, Saskatchewan gets credit for having a government with a transparent and productive approach to mining policy,” said Kenneth Green, Fraser Institute senior director of energy and natural resources and director of the Survey of Mining Companies.

“The province offers a competitive taxation regime, good scientific support, efficient permitting procedures and clarity around land claims. That’s what miners look for.”

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IRS targets uranium producer Cameco as CRA tax dispute intensifies – by Peter Koven (National Post -February 9, 2015)

The National Post is Canada’s second largest national paper.

The U.S. Internal Revenue Service is demanding back taxes from Cameco Corp., adding to the miner’s ever-growing tax woes ahead of a crucial trial expected next year.

The IRS believes the revenue reported by Cameco’s Swiss subsidiary, Cameco Europe Ltd., is inadequate and that a portion should be taxed back in the U.S. at a much higher level. The claim is similar to the one made by the Canada Revenue Agency (CRA), which is trying to shift Cameco Europe’s revenue to Canada and apply a debilitating collection of back taxes and penalties.

Cameco insists it has done nothing wrong. But the Saskatoon-based miner said that if it loses the CRA dispute, the amount of back taxes and transfer-pricing penalties could amount to as much as $1.5-billion, with other penalties added on top. That would be a devastating blow to the company.

The IRS demand is much smaller, as it seeks to collect US$32-million from Cameco that it feels it was owed in 2009. It is also auditing tax returns from 2010 to 2012, and Cameco expects the U.S. agency to make similar claims for those years.

While the IRS demands are insignificant compared to those of the CRA, some experts think the IRS move against Cameco could bolster the CRA’s case. At the very least, it gives the company another sizable headache to deal with.

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‘This one is special’: Fission Uranium’s monster resource estimate rekindles takeover chatter – by Peter Koven (National Post – January 13, 2015)

The National Post is Canada’s second largest national paper.

The monster resource estimate announced by Fission Uranium Corp. has boosted takeover speculation around the company, and chief executive Dev Randhawa isn’t doing anything to douse that talk.

He said in an interview Monday that investment bankers have already set up a data room for potential bidders. But he is in no rush to do a deal, as the company continues to expand its Patterson Lake South (PLS) uranium discovery in Saskatchewan’s Athabasca Basin.

“We don’t control if someone comes and makes a run at us. We are ready for it if someone does,” Mr. Randhawa said. It has been clear for several months that Fission’s PLS discovery is one of the best uranium finds in decades. But investors and analysts were still highly impressed when they saw the initial resource estimate.

Kelowna, B.C.-based Fission said late Friday the deposit contains an estimated 105.5 million pounds of uranium resources, of which almost 80 million are in the “indicated” category (the rest are in the more speculative “inferred” category). While the discovery is much smaller than Saskatchewan’s two largest uranium mines (McArthur River and Cigar Lake), it compares favourably to everything else in the province. And more than half of the resource comprises a “high-grade zone” that could potentially be mined at very low costs.

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Sask. potash royalty structure ‘alarmingly inefficient:’ report (Canadian Press/CTV News – January 7, 2015)

http://regina.ctvnews.ca/

A new report says Saskatchewan’s potash royalty structure needs to be overhauled because it is too complex and “alarmingly inefficient.”

Jack Mintz, a professor at the University of Calgary, says the royalty program is the most complicated in the world. “Hardly anyone understands the Saskatchewan system,” said Mintz, who is the director of the university’s School of Public Policy.

His report released Wednesday says that while Saskatchewan produces almost one-third of the world’s potash, its tax on the resource isn’t competitive on an international level. “What you really want is something that’s stable,” said Mintz, who added that there are wide fluctuations in the current approach.

The royalties collected by governments from resource companies help fill provincial coffers. Saskatchewan’s system includes a production-based levy, revenue-based levies, profit-based taxes and other taxes on capital investment.

“Saskatchewan is competitive as long as there is a lot of investment that is undertaken by firms,” Mintz said. “But it’s not very competitive — in fact it actually has the highest effective tax rate on investments compared to any other country that we look at — when companies aren’t investing as much as the 2002 period.”

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Resource revenue sharing ‘not going away’ – by Jason Warick (Regina Leader Post – December 15, 2014)

http://www.leaderpost.com/index.html

“This is something we need to get right,” Cam Broten says

The Saskatchewan government should join the growing number of other provinces and consider sharing natural resource revenue with First Nations, say experts.

“How do you reconcile if you don’t share the resources?” said Vancouver lawyer Tom Isaac, author of Aboriginal Law: Commentary, Cases and Materials. Isaac, a University of Saskatchewan law graduate who represents governments and resource companies, said any revenue sharing must be sustainable and measured, but the issue “is not going away.”

Resource revenue sharing hit the national stage last week when former Federation of Saskatchewan Indian Nations Chief Perry Bellegarde was elected to head the national Assembly of First Nations. In a fiery speech to AFN delegates in Winnipeg, Bellegarde vowed resource development would occur only after First Nations’ concerns were addressed.

“We weren’t meant to be poor in our own lands,” Bellegarde said. Saskatchewan’s Energy and Resources Minister, Bill Boyd, was not available for an interview this weekend. In a written statement, the government said its position has not changed.

“Our province’s resources belong to everyone in the province. Revenues from Saskatchewan’s resources belong to all Saskatchewan people, and everyone, including First Nations, benefit from that revenue,” read the statement.

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BHP Turns to Fertilizers in Search for Growth – by Chuin-Wei Yap (Wall Street Journal – December 11, 2014)

http://online.wsj.com/home-page

BHP Executive: Potash Seen as Strategic Focus for China Growth

SHANGHAI—Global mining giant BHP Billiton Ltd. is likely to raise the profile of fertilizers among its suite of products as it hunts for resources to tap longer-term growth in China.

The Anglo-Australian miner said Thursday it is focusing on potash as an area of strategic growth in China, adding to four key markets— iron ore, oil and natural gas, copper and coal—that the company had identified earlier this year as a slimmed-down slate designed to help BHP concentrate on getting better returns for investors.

“Potash can be our fifth pillar,” said Mike Henry, president of BHP’s health, safety and environment marketing and technology.

BHP owns the giant Jansen potash development in western Canada that could increase global supply of the fertilizer by almost 15%. The company in 2010 had also made an abortive $39 billion bid for Potash Corp. of Saskatchewan, which the Canadian producer rejected. Potash is seen by farmers as a more attractive resource as it produces more nutrients in plants compared with other fertilizers.

“Diets will continue to shift, requiring more agricultural product. That will mean you will need more fertilizer,” Mr. Henry said at a BHP event. “China will continue to be a big part of that picture.”

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Flooded Mine Bolsters BHP’s Plan for Potash, CEO Says – by David Stringer (Bloomberg News – November 24, 2014)

http://www.bloomberg.com/

The flooding of a mine owned by the world’s biggest potash producer is confirmation for BHP Billiton Ltd. (BHP)’s Chief Executive Officer Andrew Mackenzie of the wisdom of his company’s planned move into the industry.

“These sorts of factors, combined with continued economic growth and demand for potash all conspire, if you like, to bring toward us the time when a new mine is required,” Mackenzie said in an interview in Sydney. “We have the lowest cost mine that would be useful to bring into the market at that stage.”

According to Mackenzie, no major new mines have begun production since the 1970s and the halt of operations at Uralkali’s Solikamsk-2 mine, which accounts for 3 percent of world supply, is a sign of the vulnerability of supply — just as the need to feed a booming global population spurs demand.

BHP is looking to build its Jansen project in Canada’s Saskatchewan province sometime in the next decade, though Mackenzie is cautious about giving an exact timeline. Spending of $3.8 billion has been approved so far on Jansen, including mine and service shafts, and Citigroup Inc. (C) forecasts the whole project may cost $16 billion.

“We do know we have to wait for the market to come towards us, but once those shafts are complete, we are only three to four years — at most — from first potash,” Mackenzie said yesterday in the interview.

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What Uralkali’s mine shutdown may mean for the potash market – by Jonathan Ratner (National Post – November 20, 2014)

The National Post is Canada’s second largest national paper.

A major supply outage at one of Uralkali’s potash mines in Russia raises the prospect of a much tighter global market for the commodity and could serve as a much-needed catalyst for Canadian fertilizer stocks.

The shutdown of the Solikamsk-2 potash mine after Uralkali detected an increased flow of brine, which can weaken a mine’s structure, bodes particularly well for producers such as Potash Corp. of Saskatchewan Inc. to increase their sales since the Russian mine has annual capacity of approximately 2.3 million tonnes.

Raymond James analyst Steve Hansen said early indications are that the shutdown will be an extended one or possibly worse, and it comes during a period of international contract negotiations, which could influence both Chinese and Indian contract pricing to the upside.

He raised his 2015 international pricing benchmarks by US$10 per tonne to reflect the additional bargaining leverage that potash marketer Canpotex, whose members include Agrium Inc., Mosaic Co. and Potash Corp., should get from this development.

“With both Uralkali and Belaruskali running close to flat out of late, we believe that much of the volume shortfall stemming from this supply outage will accrue disproportionately to the western-based producers (i.e., Canpotex) who possess ample slack capacity,” he told clients.

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K+S Raises Profit, Sales Goals as Potash Prices Improve – by Sheenagh Matthews (Bloomberg News – November 13, 2014)

http://www.bloomberg.com/

K+S AG (SDF), Europe’s largest potash supplier, unexpectedly raised its full-year profit forecast by 12 percent as prices for the crop nutrient recovered more quickly than previously thought. The shares rose the most in almost a year in Frankfurt trading.

Earnings before interest, tax and some hedging transactions, called EBIT I, may be as much as 640 million euros ($797 million), the Kassel, Germany-based company said today in a statement. Previously K+S predicted as much as 570 million euros and a Bloomberg survey shows analysts had estimated 567 million euros.

Chief Executive Officer Norbert Steiner started a 500 million-euro cost-cutting program to help counter a drop in potash prices, triggered by Russian rival OAO Uralkali bringing extra capacity into the market last year. A “slight upwards trend” in prices is now evident, the company said today.

“All in all 2014 is looking good so far,” Chief Financial Officer Burkhard Lohr said in a video posted on the company’s website. “The long-term perspective of our business is very optimistic. Our positive business trends are holding strong.”

The shares jumped as much as 6.1 percent, the biggest intraday gain since November last year, to 23.65 euros. The stock was trading 5 percent higher at 23.43 euros as of 9:06 a.m. local time. K+S has gained 3.7 percent this year for a market value of 4.5 billion euros.

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Investment giant Capital Group boosts Potash Corp. stake above 10% – by Peter Koven (National Post – November 12, 2014)

The National Post is Canada’s second largest national paper.

The global investment giant Capital Group Cos. appears to be a fan of Jochen Tilk.

The Los Angeles-based firm disclosed in a filing this week that it has boosted its stake in Potash Corp. of Saskatchewan Inc. to 83.1 million shares, or just above 10% of the total. It owns nearly double the shares of any other single investor.

In late 2013 and early 2014, Capital Group’s stake in Saskatoon-based Potash Corp. was around 40 million shares. It has skyrocketed since then, a period that roughly coincides with Mr. Tilk joining the company. He was named chief executive in April and took over for the retiring Bill Doyle in July.

Capital Group has a history with Mr. Tilk, dating to his days as CEO of Inmet Mining Corp. Capital Group was Inmet’s third-biggest shareholder when it was acquired early last year by First Quantum Minerals Ltd. for $4.8-billion. That takeover made Mr. Tilk a free agent until Potash Corp. came calling.

Mr. Tilk spent more than two decades at Inmet in various roles and played a key role in the company’s success. He is known for his strong operational skills, though he is far less of a promoter than Mr. Doyle.

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Canada’s Potash to spend over $53 million in US Clean Air Act case – by Jonathan Stempel and Rod Nickel (Reuters U.S. – November 6, 2014)

http://www.reuters.com/

(Reuters) – Potash Corp of Saskatchewan Inc agreed to spend more than $52 million on plant improvements and pay a $1.3 million civil penalty to resolve U.S. charges that it violated the Clean Air Act over the emission of harmful pollutants such as sulfur dioxide, U.S. authorities said.

Thursday’s accord with the world’s largest fertilizer producer includes a consent decree, and is the largest in the U.S. Department of Justice’s effort to address Clean Air Act violations by sulfuric acid producers.

It resolves claims by the Justice Department and the U.S. Environmental Protection Agency that three Potash units built or modified several sulfuric acid plants in ways that allowed the emission of excess sulfur dioxide into nearby communities.

Potash spokesman Tom Pasztor said that while the company disagrees with the EPA’s interpretation of the Clean Air Act, “we opted, rather than litigate, to work with them and other regulators to resolve this dispute.”

Sulfur dioxide has been linked to respiratory and cardiovascular problems, including premature death, and contributes to acid rain, haze and smog.

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Saskatchewan mining has quiet future – by Paul Sinkewicz (Regina Leader-Post – October 25, 2014)

http://www.leaderpost.com/index.html

Gouging potash from deep beneath Saskatchewan’s surface has been the work of nasty, snarling, belching beasts of machines for more than 60 years.

The application of brute force courtesy of workhorse diesel engines did the job just fine, but with each burly r.p.m. came the inevitable byproducts of internal combustion – fumes and diesel particles and the need to bring more sweet, clean air down the shaft and deep into the subterranean tendrils of the mines.

That will all change if Patric Byrns has his way. The president and CEO of PapaBravo Innovations has been rapidly creating a new way of doing business in the province’s potash mines with a line of electric trucks. They are clean, quiet and powerful, and they are attracting attention.

“You can only exhaust so much diesel particulate into a confined space without expanding the ventilation system,” said Byrns. “So, in that environment, if you can replace diesel engines with electrics, it expands their production capabilities for what they have for ventilation, and ventilation costs a lot of money.”

Byrns said converting to electric vehicles provides operators with almost a blank cheque for how many vehicles they can put underground.

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