Editorial: Potash powers PCS

While the broad stock markets took a beating with the release of mixed U.S. economic data during the week ended July 29, the 30th trading week of 2007, the commodities markets continued to show underlying strength.

* The Potash Corporation of Saskatchewan stood out amongst the crowd as it reported its best-ever quarterly earnings of US$286 million, up 42% from the previous best achieved during the first quarter. The fertilizer king says its success reflects strengthening prices for its primary products: potash, phosphate and nitrogen.

PotashCorp also announced plans to spend US$1.6 billion for a new 2-million-tonne potash mine and expanded mill in New Brunswick, which will boost the company’s projected total annual potash capacity to 14.9 million tonnes by 2011. The mine and mill’s location near PotashCorp’s existing terminal at the Port of Saint John means the expanded production can be cheaply sent to key Latin American markets such as Brazil, which the company expects will experience “substantial long-term growth in demand.”

PotashCorp is already engaged in a major program to upgrade and expand its flagship Lanigan, Patience Lake and Cory operations in Saskatchewan.

* The Southwestern Resources saga took a turn for the weird this week. Joan Paterson, the wife of former Southwestern president and CEO John Paterson, revealed to The Vancouver Sun that her husband had been admitted to a hospital on his doctor’s advice for treatment of clinical depression. She said he would co-operate with the company’s investigation into the now-suspect drilling results at the Boka gold project in China once he feels better — but gave no indication when that might be.

Also, it’s come to light that John Paterson’s brother, Neil, was the leader of the Natural Law Party of Canada in the mid-1990s. The party’s platform advocated federal funding for research into yogic flying, which the party faithful believed was the key to achieving world peace and universal health. Memorably, they had the chirpy, now-deceased magician Doug Henning as a candidate, who would pose crossed-legged and spring himself off the ground in an attempt to demonstrate the technique. Through a jointly held company, the Paterson brothers own a combined 17% of Southwestern, meaning the value of their combined holdings has dropped by about $130 million since Southwestern’s stock peaked above $20 per share in January 2004.

* Hmmm. . . maybe it wasn’t such a good idea to build a heap-leach pad on the side of a hill in the rainy tropics. On July 25, Glencairn Gold suspended operations at its Bellavista gold mine in Costa Rica owing to concerns that some parts of the leach pad and waste pile were sliding downhill as much as 1 cm per day. The leach pad is about 400-by-400 metres with the ore stacked up to about 90 metres. The mine will be shut down until the company figures out what to do next.

July was a bad month for the reputation of heap-leach gold mines around the world, with Eldorado Gold’s Kisladag mine in Turkey being forced by court order to shut down until the company gets its environmental studies and permits sorted out.

* There was some good news this week for the Sudbury, Ont., community, with Xstrata Nickel announcing it would plough another $8.7 million into the Thayer-Lindsley nickel mine in order to boost productivity and extend its life at least a year to the end of 2012. The funds will be used over the next year to carry out more than 1,100 metres of lateral development to access ore, improve ore pass design, and buy new mine equipment. The mine opened in 1991, and employs 195 employees and contractors.

Meanwhile, Xstrata Copper Canada struck a 3-year collective bargaining agreement with the Steelworkers Union at the company’s CCR refinery in Montreal, ending a strike. The facility will gradually return to full production in the coming weeks.

* In Canada’s Arctic, BHP Billiton reported that work at the $245-million underground Koala project at the Ekati diamond mine is progressing on budget and on schedule for year-end startup production. During the recent quarter at Koala, underground tunnelling was completed for critical access.

Globally for the fiscal year ended June 30, BHP achieved annual production records for natural gas, alumina, aluminium, copper, nickel, iron ore, manganese ore, and metallurgical coal.

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