Blockbuster year for Saskatchewan potash.

The Saskatchewan potash industry had a blockbuster year in 2000 as the industry produced more potash than ever before. Offshore sales were at an all-time high and it was the second-best year ever for domestic sales.

The value of Saskatchewan potash sales were at a record high of $1.7 billion, surpassing the previous record of $1.6 billion in 1999 despite the fact the average price slipped to $200 per tonne K2O from $205 per tonne K2O in 1999 based on preliminary figures.

Saskatchewan Mining Association Chairman Harry Ewaschuk reports the Saskatchewan potash industry produced a record 8.7 million tonnes K2O in 2000, topping the previous record of 8.65 million tonnes K2O in 1998. The Saskatchewan industry, with 95 per cent of Canada's potash production, provided one-third of the world's total potash in 2000. There are three companies producing potash in Saskatchewan operating a total of eight underground mines and two solution mines. The industry took fewer shut downs than in 1999 which allowed it to operate at 72 per cent of capacity.

In 2000, the Saskatchewan potash industry sold 8.6 million tonnes K2O. It was the second-best year ever, surpassed only by sales of 8.7 million tonnes K2O in 1997 when domestic sales totaled 5.5 million tonnes K2O. That year Saskatchewan producers picked up additional sales when Potacan in New Brunswick was flooded.

Domestic sales (sales to the United States and Canada) in 2000 were five million tonnes K2O, an increase of six per cent over the 4.74 million tonnes in 1999. It was a longer-than-normal spring season last year but the big difference in 2000 was record offshore sales, which rose by over 350,000 tonnes K2O to 3.6 million tonnes K2O.

"China and Brazil were the big reason for the increase in offshore sales," Ewaschuk says. "China began buying potash in earnest at the end of 1999 and by the end of the first half of 2000 had purchased record volumes from Saskatchewan producers. Brazil also began early and finished the year importing record volumes from all suppliers. Soybeans, coffee, sugar cane and citrus, important export crops, continue to drive the Brazilian potash market."

These two large and important offshore markets for Saskatchewan potash combined to account for half of Saskatchewan's offshore sales last year. Saskatchewan producers' offshore sales represented 42 per cent of total sales in 2000 with the balance going to the U.S. -- a mature and Saskatchewan's largest market -- and Canada.

World potash demand grew 2.6 per cent last year to 25.3 million tonnes K2O. While Saskatchewan sold eight per cent more potash and supplied 34 per cent (from 32 per cent in 1999) of total world demand, former Soviet Union (FSU) production and sales were down by eight per cent. The FSU's share fell from 29 per cent in 1999 to 27 per cent in 2000. Israel and Jordan expanded sales by three per cent and eight per cent, respectively.

"World demand is expected to lag a bit and after record production and offshore sales last year, Saskatchewan production and sales could be down slightly in 2001," Ewaschuk says. The start to 2001 was slow due to last year's inventory carryover in China and Brazil along with cautious buying for the U.S. spring season. This resulted in shutdowns at mines in Saskatchewan at the beginning of this year but events can change in the blink of an eye. By early February, China had returned to the market with a major buyer purchasing traditional volumes at unchanged prices. Brazil is expected to be strong again this year although its major buying season does not really take off until the second half. U.S. demand could be affected by high nitrogen prices while potash prices are expected to remain stable.

The longer term future for the Saskatchewan potash industry looks bright. World demand is forecast to grow at over two per cent a year and there is very little new potash capacity in the wings. With its excess capacity, transportation and distribution infrastructure and quality product, Saskatchewan is well positioned to benefit from growing demand in Asia and Latin America where some markets are growing by more than twice the world rate.

The industry's safety statistics also showed a marked improvement over 1999. The number of lost time injuries, the number of days lost, the lost time frequency rate and the severity rate all improved considerably.

"It is encouraging to see this improvement and it comes as a result of a lot of hard work by all concerned at the mines," Ewaschuk says. "We all recognize that we still need to keep working at safety and set as our target the goal of not having any serious accidents."