CANADA - Tags: BUSINESS
Rocanville Potash Corp mill production supervisor Dave Carter samples some potash on it process of being refined at the mill in Saskatchewan September 30, 2010. A far-reaching, independent report on the economic impact of a Potash Corp takeover will set the tone for a Canadian political response to BHP Billiton's $39 billion hostile bid or any other offer that surfaces. Picture taken September 30, 2010. REUTERS/David Stobbe (CANADA - Tags: BUSINESS) - RTXSX1A Reuters
Potash Corporation of Saskatchewan is cutting its workforce by about 18 per cent, affecting about 1,045 people — with the biggest hits in its home province of Saskatchewan as well as Florida and New Brunswick.
The Saskatoon-based company says the decision is necessary because of soft demand for potash and phosphates, which are used to make fertilizer.
"This is a difficult day for our employees and our company," said Bill Doyle, PotashCorp's president and chief executive.
"While these are steps we must take to run a sustainable business and protect the long-term interests of all our stakeholders, these decisions are never easy.
"We understand the impact is not only on our people, but also in the communities where we work and live, and PotashCorp will work hard to help those affected through this challenging time."
PotashCorp says the biggest job cuts will be in its home province, where 440 people will be affected — about 42 per cent of the total affected by the downsizing.
Most of those will be at its Lanigan, where two mills will suspend production by the end of 2013, and Cory, where production will be reduced, and the Saskatoon headquarters.
New Brunswick will also see 130 people affected while the rest will be outside Canada, including more than 435 in the United States. Potash Corp. plans to stop production at its Penobsquis facility in New Brunswick at the end of the first quarter of 2014.
Florida will lose 350 jobs while another 85 people will be affected in North Carolina.
One of two phosphate plants in White Springs, Fla., and the Suwannee River chemical plant, will be closed. A loss of capacity at White Springs is expected to be partially offset by higher output at Aurora, N.C.
There will another 40 jobs affected in other parts of the United States and in Trinidad.
PotashCorp is Canada's largest producer of potash, which is sold around the world to help farmers boost crop production.
PotashCorp reported its weakest quarter in three years in October, and cut its full-year earnings forecast because of falling demand and prices.
The company's potash sales fell to 1.5 million tonnes in the third quarter from 2.1 million tonnes a year earlier, while its average realized price dropped 28 per cent to $307 per tonne.
Demand from key markets such as China and India has been flat.
Potash prices have been sliding since a dispute began between the world’s biggest producer, Russia's Uralkali OAO, and rival Belaruskali of Belarus. The two had formerly had a marketing agreement that kept excess capacity out the market, but Belaruskali broke away, saying it wanted to maximize sales.
"While the [job cuts] announcement blames soft demand in developing markets, we believe the real culprit is the BPC (Uralkali-Belaruskali) breakup, and the resulting price declines in both [phosphate and potash]," BGC analyst Mark Gulley said in a note to clients.