Government should take over the Picadilly mine

Nutrien is in the paper today saying it will probably never mine potash in New Brunswick again.  Fine.  That’s their decision.  Now the provincial government should take over the site and market it to other potash producers around the world – with a really good royalty rate.  If no one wants it, again, fine.  But this is an asset owned by New Brunswickers.  We should do everything in our power to promote the mining opportunity.

What about the $2B infrastructure on site?  It’s worth zero – actually less than zero to Nutrien – as they would have to pay 10s of millions if not hundreds of millions to fully remove all the infrastructure and remediate the site back to its original state.

They cannot just squat on that site and lock up that resource forever. If they want to remove all the infrastructure, fine.  You have six months to move it otherwise government will take it over and promote the mine to other operators.

The potash market is close to a cartel.  Closing Sussex (and other mines) was meant to remove production and push up the price.

But there may be some operator out there – Chinese, Ukrainian – that would take it over if their capital costs were low.

For those of you who would decry the government taking over a mine site like this what is the alternative?  The assets are worth nothing to Nutrien.  They are written down.  They should have no right to lock up that asset for another generation or more.

If no other operator is interested – after a good faith effort and a very competitive royalty rate structure – then so be it.

But government owes it to New Brunswickers to try.

2 thoughts on “Government should take over the Picadilly mine

  1. The Province might consider offering Nutrien an ability to walk-away without recourse on the abandonment liability. And then proactively seek a new operator for the mine. The Province could undertake a study in the meantime to assess the costs of production and rank relative to other sources of supply globally. 90% of that work could be accomplished by an Undergrad intern and/or conversation with an Investment Bank’s Mining Analyst [TD?]. If it’s uneconomic, then keeping Nutrien on the hook for abandonment is the best approach for NB.

    Othwerwise, if by ‘take back’ you mean nationalising (ie breaking the law) – that won’t be helpful to the long term investment attractiveness of the Province.

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