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JUNE 7, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER
NEWS
POTASH | SASKATCHEWAN
LIVESTOCK | ETHANOL
Jansen mines still on despite CEO’s remarks
Ethanol called threat to livestock industry
BY KAREN BRIERE REGINA BUREAU
Work is continuing at the BHP Billiton potash mine site in Saskatchewan despite a potential delay in formal approval of the project. Spokesperson Bronwyn Wilkinson said June 4 that comments made by company chief executive officer Marius Kloppers last week, which led to speculation the approval for the Jansen project won’t come this year, were not new. Kloppers told Chinese media company Caixin that the company would not approve any of its megaprojects within the next six months, and that
the economics of some of the projects had changed. “I think for the next two years, 18 months perhaps, we will just wait and see how things develop,” he reportedly told Caixin. BHP has said in the past that it expected approval for Jansen within 2012. In February, concerns the project would be delayed or not proceed were also fueled by comments Kloppers made to an Australian newspaper. Since then, work has steadily proceeded at the site between LeRoy and Jansen. “There is nothing new in what our CEO has said,” Wilkinson said in an e-mail. “The sequencing of our
investment pipeline is currently being looked at in the context of our five-year planning process. We will approve projects in a sequence that maximizes value, reduces risk and balances the consideration of short and long-term returns.” BHP has already allocated spending of at least $2 billion on the $12-billion project. Wilkinson said the company is “focused on getting the engineering right while we sink the shafts and will go to the board when the necessary studies are complete.” About 400 people are working on site. The production and service shafts have been excavated to 45
metres and are ready for excavation to one kilometre. Work has also begun on the nearby work camp. The first 500 beds will be ready later this year. The company has said the mine would open in 2015. Still, potash prices are dropping, which continues to fuel speculation the project won’t ultimately go ahead. BHP has other Saskatchewan potash projects in the works. A concept study at Young, Sask., has been completed. As well, a concept study at Melville, Sask., is underway. The results of both will determine whether the projects have potential.
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More ethanol in gasoline draws grain away from livestock feed BY BARRY WILSON OTTAWA BUREAU
QUEBEC CITY — The Canadian meat industry, on both the producer and packer sides, should step up efforts to counter ethanol industry lobbying for stronger government support, says a prominent industry analyst. Kevin Grier, senior market analyst at the George Morris Centre, told the Canadian Meat Council annual conference June 1 that a biofuel industry push to have the mandate for ethanol in gasoline increased to 10 percent from five percent would inflict severe damage on the livestock industry. Grier said despite biofuel industry a n d g o v e r n m e n t d e n i a l s, t h e increased demand for grain as a feedstock has increased costs for the meat industry and reduced its profit margin. He estimated it has added $130 million annually in feed costs for cattle and hog producers. He said the livestock industry in Ontario is particularly vulnerable. “Ethanol is the strongest threat to Ontario hog and livestock sectors,” said Grier. “If it goes to 10 percent, it will be devastating. This industry has to dig in to stop the mandate at five percent.” The GMC livestock specialist offered a mixed message about the health of the industry. He began on a positive note. “I want to convey the message that it is hard not to be optimistic about the Canadian livestock and meat industry,” he said. While domestic per capita meat consumption has been declining, world demand is growing and Canada is a major exporter. “We’re in a whole new world when it comes to pricing,” said Grier. “Export demand is supporting soaring price levels.” He said a report for the Canadian Pork Council on the impact of industry exports shows a $3.2 billion benefit for the industry, significantly higher prices per head for producers and $9.3 billion in added economic activity in Canada. That includes $2 billion in wages in the livestock and meat industry. It also contributes $318 million in tax dollars to government. However, the domestic scene is less promising. Demand already is falling and as production costs rise and retail price levels rise with them, it could stifle demand even more, he said. Farmgate prices have been strong because of growing foreign demand. “Processed food prices haven’t kept up but they will, and when it happens, will that cut demand even more?” he asked.