Province set to announce major potash pact
Published Saturday December 10th, 2011
C1Natalie Stechyson
Telegraph-Journal
The provincial government is set to announce Monday that it has signed an agreement to award a company the right to explore and develop the Millstream potash deposit near Sussex. If exploration by the company - the name of which hasn't yet been disclosed - confirms that the deposit is economically viable, developing a new mine could mean hundreds of new jobs and millions of dollars in tax and royalty revenues.
The company is also proposing other investments in the province that will be announced in the near future.
The province confirmed Friday that a major "good news" announcement regarding the Millstream potash deposit near Sussex will be made on Monday. Premier David Alward and Natural Resources Minister Bruce Northrup will participate in the announcement, set for 11:30 a.m in Sussex.
"It's good news for the economy and it's good news for the area, definitely," said Anne Bull, a spokeswoman for the Department of Natural Resources.
The province called for bids on the Millstream deposit in April and two submissions were received. In its request for proposals, the province said it would give priority to a company committed to carrying out additional refining or value-added production within New Brunswick.
The deposit, discovered more than 25 years ago, was never developed since potash prices didn't justify the cost of mining. In April, Northrup said the site had the potential to create 1,000 jobs with possible spinoffs elsewhere.
"Maybe in Saint John they could build a fertilizer plant where other minerals could be used," Northrup said at the time.
Potash - a form of salt used in fertilizers - has become a hot commodity in recent years. Consumption has increased by 83 per cent in China, India, other Asia and Latin America over the past 20 years, closely matching food production trends in that time, according to PotashCorp, the world's leading potash developer.
The agricultural sector primarily uses potash in blended fertilizers. It is mined in 13 countries and used by more than 150 countries.
Millstream is one of four known potash deposits in New Brunswick. All of the deposits are in the Sussex area, and three have already either been developed or are in the process of being developed.
The last major potash announcement in Sussex in 2007 came with an upfront $1.7-billion investment, and a similar investment should be expected with this announcement, said David Campbell, an economic development consultant based in Moncton.
That will translate into a flurry of economic activity during the construction phase, Campbell said. From there, there will be ongoing economic activity from the operations in the mine and the exporting of the potash. And if the value-added component translates into processing the potash in New Brunswick, that would be another capital-intensive project.
A new mine could mean about 500 new jobs per year, millions of dollars in tax revenues and millions in royalty revenues, Campbell said. Mining jobs pay about 50 per cent more than the average, Campbell said.
"Any of these natural resource projects have the benefit of high-wage jobs, lots of capital investment and then royalties off the natural resource that's extracted," Campbell said.
"These are big numbers and this is an important announcement."
In 2010, New Brunswick exported $279 million worth of potash, mostly to Brazil. The value of those exports over the past 10 years was $1.5 billion.
The Millstream development will be huge for Sussex, creating hundreds more jobs for the region, said Mayor Ralph Carr.
"The other mines out at Penobsquis have changed the landscape, not only physically but in town and in the area. It affects everything - housing starts, schools, hospitals. It's huge, it's a huge thing," Carr said.
"We're really looking forward to them getting up and running, although it will take a few years."
It will be a tremendous boost to the economy, not only for Sussex but for the whole region, Carr said, and the spinoff will be phenomenal, affecting everything everything from jobs to transportation to new stores coming to town.
"It opens up opportunities for businesses that are looking to come here. It just says to them 'Hey, this place is really going to go and we better get our foot in the door'," Carr said.
After two years of sluggish provincial growth, potash production is expected to give New Brunswick an economic boost in 2013, according to a provincial monitor released this by BMO Economics. BMO expects that a lot of the current development in the potash sector will lead to physical output by 2013, which will boost real GDP growth that year.
In small provinces such as New Brunswick, one or two projects like that tend to have a pretty material impact on GDP growth, economist Robert Kavcic said.
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