Potash Corporation of Saskatchewan suspends NB operation, cuts 420 jobs

The Picadilly potash operation in New Brunswick is suspending production indefinitely, resulting in the lay off of more than 400 people.

Dominic LeBlanc, federal Liberal House leader and senior cabinet minister from New Brunswick, admitted it will be tough for people in the Sussex area to find new jobs.

Potash Corp. of Saskatchewan CEO Jochen Tilk said closing the company’s Picadilly mine would allow it to “take the benefit” of cheaper Saskatchewan mines amid a soft global potash market.

“We understand the significant impact to our people in New Brunswick and the surrounding communities and are committed to helping those affected through this challenging time”.

The rationale for the move, said company officials, is to optimize production to lower-cost potash operations and preserve jobs across the company in the long term.

It also estimates that Picadilly’s closure will cut capital costs by $50 million in 2016 and $135 million over the next two years. The Firm owns and operates five potash activities in Saskatchewan and one in New Brunswick.

PotashCorp’s storage and loading facilities at the port in Saint John will be made available to Canpotex.

Placing the Picadilly mine in “care and maintenance mode” – which paves the way for a potential restart – will cost the Saskatoon-based fertilizer company $20 million this year and $15 million in subsequent years. Should the company decide to resume operations, it would take about a year to get it running again.

New Brunswick employees who do not remain at Picadilly or choose not to relocate to Saskatchewan, will be given severance and assistance packages. PotashCorp will also establish a $5-million community investment fund.

Provide financial support to local business.

Given that New Brunswick operations has been on inventory adjustment shut down since the end of November, the suspension of operations will be effective immediately.

As originally planned, environmental remediation work and care-and-maintenance at Cassidy Lake will continue, as will decommissioning at Penobsquis.

As well, operating costs for the new mine were expected to be roughly three times higher than in Saskatchewan because of the depth of the potash deposits, he said. It also produces large amounts of nitrogen and phosphates, which are also used as crop nutrients. The company has a market cap of $19.47 billion.

Potash Corp’s stock was 60 Canadian cents firmer at C$23.63 on the Toronto Stock Exchange on Tuesday. PotashCorp expects this will increase competitiveness and reduce the cost of goods sold.

Potash Corporation of Saskatchewan Inc. has dropped 24.38% during the last 3-month period.