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Monday Morning Commentary

Rick Swenson

If the amount of feedback that I’m getting from many of you regarding the possible takeover of PCS by Billiton and the amount of ink in our newspapers is any indication, then we have a really hot topic on our hands.

Potash is something that seems to bring out many strong feelings in Saskatchewan’s population. One thing that we should all keep in mind regardless of our ideology, our approach to business or our social conscience is that potash is one of many rich resources that this province is blessed with and at the end of the day, those resources belong to the people – not governments, not companies and certainly not other countries.

When the Progressive Conservative government of Saskatchewan made the decision to privatize the Potash Corporation, it was done not so much because of ideology but because it was simply not an option for the taxpayers of this province to be able to put enough money into that industry to maximize its potential. It was not hard for me as an MLA and soon thereafter as the Minister of Energy and Mines to speak in favour of a change that would see our rich potash resource being able to grow and prosper because it was able to get the capital it needed out of the marketplace to put in the infrastructure necessary to be successful. At the same time, Saskatchewan taxpayers were being rewarded with increased employment opportunities, increased taxes being collected and increased royalties to help fund the things that we all appreciate about our society. Privatization has been a win-win proposition for everyone.

PCS has gone from a $400 million a year company to the world’s largest fertilizer producer and has been one of the backbones of our economy which succeeding governments have relied upon. A big part of that success has been brought about because our potash mining companies have conducted their business in such a way to avoid being tied up in litigation in American courts as was the case in much of the 1980s and because they have been price setters, not price takers, for much of the last 20 years in the international marketplace.

The formation of Canpotex, the international marketing arm of the Saskatchewan potash industry, has by and large been a very successful venture and one well-respected around the world. There is a very large issue facing the industry now with the possible take over of PCS by the large Australian firm, Billiton, and with it the dominant position that PCS enjoys in the industry with over 60% of the reserves and market share that this company has enjoyed.

Billiton has already indicated to everyone in the industry that they would probably withdraw from Canpotex if they are successful in their takeover bid. What we in Saskatchewan must determine are two fundamental questions. First - are we prepared to accept what the stock market gives us? Companies are constantly buying up other companies and governments seldom interfere. Number two – are we prepared to have one player assume such a dominant position in an industry that is dominated worldwide by Saskatchewan’s huge potash reserves?

One of the first thoughts that has occurred to me is why a company as large and successful as Billiton who has already bought up large reserves of potash ore in Saskatchewan with the plan to build a major mining facility at Jansen, Saskatchewan would be wanting to buy up mines that in many cases are already 30 years old. We in the PC Party in the 1970s and 80s, used to criticize the NDP when they nationalized a good part of the potash industry for buying used holes in the ground rather than doing something to expand the industry by creating new mines and the jobs and monies that would flow from it. I guess Billiton and the NDP aren’t a whole lot different. The NDP needed instant gratification for the voters by their move into the industry with profits immediately for the next budget and it seems Billiton needs to have instant gratification for their shareholders rather than taking the time to develop their 8 million tonne a year plant at Jansen.

Personally, I would like to see more players in the industry not less. Competition is good in the North American marketplace and it takes away the temptation of a company like Billiton to be a bully and down the road, thumb their noses at the owners of the resource – the people of Saskatchewan. I’m not saying that this would occur but I know that the dream that I spoke about in the Legislature back in 1989 was for a potash industry that wasn’t dominated by government or for that matter, one big company but would be an industry that paid its fair share and in doing so, benefited all the people of this province. Saskatchewan has potash reserves that are large enough to support a half dozen mining companies and all of the jobs and support services that would go with that level of activity. This should be a goal that all Saskatchewan governments strive to achieve. My worry is that the Sask Party’s slavish devotion to big business will impede our government taking the long-term view of this industry but rather they will seek out some sort of short term gratification because we are having an election in November 2011.

I really appreciate all of the comments that have been coming in and we will all not agree on this topic but if we remember the end goals, Saskatchewan will be the beneficiary.

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These issues must be debated for “The Right Reasons”.

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