Trust potash producers for responsible approach.

From the outside the potash industry looks routine. Plain and simple it appears when stacked up against some of its high-return and high-maintenance brethren in the mining family. Trustworthy in the eyes of those who rely on the industry to put bread on the table and two cars in the garage.

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Still waters, as they say, often run deep.

While Saskatchewan Mining Association Potash Section Chairman Ken Grimm agrees that potash "has been a very stable industry, providing steady returns to investors and consistent payback opportunities to its stakeholders," he contends there are some challenges facing the industry.

Domestic and international markets, he explains, want different things when it comes to potash. Some want a specific size and others need a certain grade. Some even prefer one color over another.

"Saskatchewan producers have been willing to look at specific products and have done their homework as far as understanding what the consumer wants," Grimm says. "The Saskatchewan potash producers have been able to meet the challenges put to them."

Their responsiveness and a stronger demand in the marketplace for Saskatchewan potash has helped increase sales over the past year. Through Canpotex, the international marketing agent for potash producers in this country, the industry has seen significant growth.

Grimm points to places such as Brazil and India where very good gains have been made in potash sales and he reports China continues to be quite a rewarding market destination for Saskatchewan potash. All the while demand has been stable in the United States which helps keep the price steady.

"Some of the price increases we've seen over the past couple of years are starting to stick, which opens up the opportunity for future capital investment around the industry."

Grimm believes potash producers in this province have invested wisely both to satisfy immediate objectives and meet long-term goals. While most of the mines have passed their 30-year anniversaries they are still quite sound in their infrastructure.

"I view these mines as pretty new. Equipment always needs to be replaced but that has more to do with maintenance than anything," Grimm says. Travel times to mining faces, challenges in ventilation, on-going capital and long-term mine planning are a few of the more pressing issues."

"There are better communication systems now than there were years ago, our technology in bolting systems has made mining safer and there is a greater focus on automation in all aspects of the industry," Grimm says. "We're getting smarter in all our work practices."

A significant threat lurking just beneath the surface, Grimm believes, is a tax structure positioning Saskatchewan producers at a severe competitive disadvantage. In particular, watch out for the much-improved Russians.

"Quite simply, the tax rate here is a killer versus the competition," Grimm states. "Out of every dollar we make, 70 per cent goes to taxes compared with countries like Russia and Argentina where it runs at about 35 per cent. That's a significant deterrent to investing here."

"There is strong interest to invest here and the reason it's not happening is not because of the market and it's not because we don't have the cash. We need a tax structure that at the very least allows us to be competitive and provides incentive to invest in Saskatchewan."

Another challenge currently facing industry is getting potash to market on time and at the right price. Grimm predicts the availability of rail cars is going to be a problem in the future.

The industry has been aware for some time that a large number of key people will be retiring over the next 10 years. It won't be a shock when the labor pool begins to drain but the question remains: Where do we get the people?

"We do have a lot of good people moving on and a lot of young people have already left Saskatchewan," Grimm says. "We need to continue our commitment to first off, finding replacements for our tradespeople, and secondly, dedicating the time necessary to developing the skill sets we need in mining."

Grimm expects the well-founded relationships in potash mining will serve the industry well over the next few years. Collaboration between potash producers, employees and unions has been positive in every area, none more so than safety.

"Every producer's goal is to get to the point where there are zero accidents," Grimm says. "Behavior-based systems are the next level of safety and they've been excellent at engaging employees in the process and ensuring they become more of a stakeholder in safety."--J.A.