Editorial: Pot-ashen in Saskatchewan

December started off in a rather sombre way for Canadian mining, with former Prairie golden child Potash Corp. of Saskatchewan announcing deep and immediate cuts at its Canadian, U.S., and Trinidadian operations.

As detailed in our front-page story, PotashCorp is eliminating 1,045 positions, or 18% of its workforce: 440 people in Saskatchewan; 130 in New Brunswick; 350 people in Florida; 85 people in North Carolina; and another 40 in other U.S. locations and in Trinidad.

The cuts come as PotashCorp still reels from the surprise breakup of the marketing agreement between the world’s largest potash producer, Russia’s Uralkali, and its rival Belaruskali of Belarus, as the latter broke away, saying it wanted to bump up production to maximize sales.

Potash prices have been in a tailspin ever since, as consumers have held back on purchases in anticipation of lower prices, creating a downward spiral of oversupply and falling prices.

It resulted in PotashCorp registering its weakest quarter in three years, and there appears to be no relief in sight, except through sharp production cuts — in stark contrast to what is now seen as its overexpansion of production over the past half-dozen years.

And of course, soft phosphate prices have only compounded the PotashCorp’s problems.

The layoffs underscore a recent report by TD Bank’s deputy chief economist Derek Burleton and three other bank economists that tries to debunk what it calls the “myths” of widespread skill mismatches in Canada and a looming labour shortage, as the workforce ages. Their analysis of vacancy, wage and unemployment rates in the country for 140 occupations in fact finds no proof of an imminent skills crisis.

The report notes that while some groups — such as the Conference Board of Canada — have said the country is facing a shortage of 1 million workers by 2020, such long-term forecasts should be looked at “with considerable skepticism.”

• After many signals and rumours, the next generation of Barrick Gold’s board and executive team was firmed up on Dec. 4.

Founder and co-chairman Peter Munk will indeed retire at the next annual general meeting in 2014, when co-chairman John L. Thornton will become full chairman.

Also taking a walk in the snow are Howard Beck and Brian Mulroney, who will not stand for re-election as directors at the next AGM.

Barrick Gold has taken heat in the past for a lack of independent directors, and the company has responded with four new candidates for election as independent directors: Ned Goodman, Nancy Lockhart, David Naylor and Ernie Thrasher.

Barrick says that once these changes are implanted, its board will be more than two-thirds independent, with 10 independent directors and four non-independent directors.

Perhaps a tougher sell to shareholders will be its plan for an executive compensation plan to be voted on at the AGM, which it says “will align fully with the principle of pay-for-performance, further linking compensation with the long-term interests of shareholders.”

Another big change in the executive suite is Jim Gowans’ appointment as executive vice-president and chief operating officer.

Gowans is best known in Canadian mining circles for his time as president and CEO of De Beers Canada during its rapid expansion and mine building in Canada in the 2000s. Currently he is CEO of Debswana in Botswana, and before that was COO and technical officer for the De Beers Group. Before his De Beers days, he was COO of PT Inco.