Over 1,000 potash mine workers at two Mosaic Co. operations in Saskatchewan have been served with layoff notices to take effect in the next couple of months, according to news reports.
Regina’s Leader-Post reported Monday that 360 hourly employees at Mosaic’s Colonsay mine, east of Saskatoon, got their notices Thursday and 700 more at the company’s Esterhazy mine, southeast of Yorkton, received theirs Friday.
The notices affect about 80 per cent of the two mines’ total workforce, taking effect March 8 for an indefinite period at Colonsay and Feb. 15 at Esterhazy for a “renewable two-week period,” the newspaper reported.
The Reuters news service on Monday quoted Brad DeLorey, a spokesman for the Minnesota-based fertilizer firm, as saying “the economy is weak” and the firm wants to “match supply with demand.”
Mosaic and other potash players in Saskatchewan say they’ve passed through a period of rapidly escalating profits while crop prices and the resulting worldwide demand for the mineral fertilizer soared.
Mosaic, for one, on Jan. 5 reported profits of $959.8 million on $3.01 billion in sales in its second quarter ending Nov. 30, 2008, up from $394 million on $2.2 billion in the year-earlier period. Its potash net sales in Q2 alone more than doubled to $973.2 million (all figures US$).
But Mosaic and other potash firms, which have also announced layoffs and reduced production at their Saskatchewan mines, say the peak has passed for now. Mosaic CEO Jim Prokopanko said last week that “worldwide crop nutrient sales activity dropped sharply” near the end of the company’s Q2, and sales are expected to continue weak at least through its Q3.
“Because of these conditions, we are reducing our production to manage excess inventories, reducing capital expenditures, and working to maintain financial strength and flexibility,” Prokopanko said last week.
Norm Beug, Mosaic’s vice-president of potash operations, was quoted Monday in the Leader-Post as saying “the marketplace is sort of frozen up because of the credit crisis… Grain prices aren’t high enough for the farmers to get moving, so everybody’s sitting tight and waiting.”
All that said, “we continue to believe long-term agriculture fundamentals are excellent,” Prokopanko added in Mosaic’s Jan. 5 release. “Bumper crops are still required to secure the world’s food supply and crop nutrients will play an essential role in achieving that objective.”