Firing up a new potash war

DALE EISLER September 7 1987

Firing up a new potash war

DALE EISLER September 7 1987

Firing up a new potash war

The decision could cripple Saskatchewan's billion-dollar potash indus-

try. Late last month the U.S. Department of Commerce (DOC) ruled that the Crown-owned Potash Corporation of Saskatchewan (PCS) and four other private mining firms in the province were selling potash, a widely used farm fertilizer, in the United States at unfairly low prices. As a result it slapped an interim duty on potash that may push prices up by as much as 85 per cent and in the process freeze the province’s producers out of the U.S. market. And last week, as Saskatchewan officials weighed their options, including an appeal of the ruling to the

DOC’s International Trade Administration, they were clearly worried. Said Saskatchewan Trade Minister Robert Andrew: “The impact on our industry can only be described as devastating.”

The fertilizer duty was the latest in a series of blows to the province’s economy. In July an Appeal Court in Denver, Colo., ruled that foreign exports of unenriched uranium to the United States had made the U.S. industry unviable, and that decision forced the DOC to immediately ban most uranium imports. That ruling is now being appealed, but if confirmed it could damage the province’s uranium industry. At

the same time, the province’s linchpin wheat-producing sector has been hit by a worldwide farm subsidy battle that has pushed some grain prices to a 30year low of $2.60 per bushel. Last week

the province’s farmers were hurt as a national railway strike stalled grain shipments. And the resulting revenue crunch is pushing the province’s current $600-million operating deficit higher.

The potash duty, pegged in part to the cost of production by eight companies, ranges from a low of nine per cent on potash produced at the International Minerals and Chemicals Corp. (Canada) Ltd. mine to 85.2 per cent on production at the Central Canada Potash mine. And at a meeting of provincial leaders in Saint John, N.B., last week, Saskatchewan Premier Grant Devine said that he was considering sus-

pending potash shipments to the United States if the duty were approved.

The Saskatchewan potash industry is a traditional irritant to the Americans. In the late 1960s, Ross Thatcher’s Liberal administration angered the Americans when it imposed a quota system on the province’s glutted potash sector. But it was mild compared with the outrage that washed over the industry in 1976 when Allan Blakeney’s NDP government began purchasing three of Saskatchewan’s 10 potash mines plus an interest in three others. Still, Saskatchewan may find that it has some American allies. U.S. farmers could be hurt by rising fertilizer costs, and two of the mining firms caught by the ruling are American. Said industry analyst Stanley Deutsch: “The Americans are biting themselves in the tail.”

DALE EISLER