$3.5B Saskatchewan potash mine put on hold

Low potash prices have made the prospect of developing the Kronau potash mine in Saskatchewan uneconomic.

In a letter to the community of Kronau, located 28 kilometres northeast of Regina, Vale SA (NYSE:VALE) stated that it would wait until market conditions improve to construct the $3.5 billion solution potash mine. Vale Potash currently has about 30 people working on the project, mainly in Regina.

According to a project page on its website, Vale says the Kronau mine would produce 3 to 4 million tonnes of potash a year for a minelife of over 40 years. Construction would employ around 2,000 and once completed, the mine would create about 350 permanent positions.

However development of the mine was shelved once before, in 2012, and virtually no work has been done on the site.

Potash prices are in a multi-year slump, with producers of the fertilizer ingredient feeling the pain.

In October Canada’s Potash Corp. (TSX, NYSE:POT), the world's biggest fertilizer producer by market value, cut its full-year earnings forecast and said it expects to sell less potash in the year than expected due to weak demand and prices, as well as higher costs.

The Saskatchewan-based company saw its third quarter profit fall by 11%, as it also was hit by weak nitrogen prices and increased phosphate costs in the period.