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I had the following comments in yesterday’s front-page story on Vale’s decision to postpone its proposed $3-billion potash mine at Kronau, Saskatchewan:
Regina economist Erin Weir, who is widely expected to run for the leadership of the provincial NDP, said in a statement Friday that the Vale announcement “represents a failure of the Saskatchewan government’s approach of almost giving away the resource to encourage companies to dig it out of the ground as quickly as possible.”
“The silver lining is that Vale will not increase potash supply as quickly as expected. A tighter potash market likely means higher potash prices and even larger profits for existing producers,” he said.
What did not make it into print was my further argument that the provincial government should collect a better royalty return from those existing companies by ending the potash production tax concessions that proved ineffective in spurring Vale’s investment.
Another important issue is that Vale has been a rather poor employer in Canada’s mining sector. In 2009, it provoked a strike that lasted more than a year at its nickel mines in Ontario and Labrador.
In response, the Government of Newfoundland and Labrador established an Industrial Inquiry Commission, which made recommendations about how a small province could more effectively deal with large multinational employers.
The Government of Saskatchewan should use the time provided by the Kronau delay to consider these issues, so that our province does not have a similar experience with Vale if the mine is built.
Erin Weir is a CCPA research associate.
