Industry Leaders Call Nutrien’s U.S. Strategy a Significant Strategic Error for Carney
Nutrien Ltd.’s NTR-T decision to invest up to $1-billion in the U.S. for a new export terminal represents a failure of Ottawa’s trade diversification and critical minerals strategy, supply chain and industry advocates say.
On Wednesday, Saskatchewan-based fertilizer and agricultural giant Nutrien announced plans to build an export terminal with capacity for five to six million tonnes of potash a year in Longview, Wash.
Should the investment be finalized, by 2031 as much Canadian potash mined by Nutrien will be shipped to overseas markets via the U.S. as via Canadian ports.
“This is a failure,” said Heather Exner-Pirot, senior fellow and director of energy, natural resources and environment at the Macdonald-Laurier Institute. “It is especially painful that this critical mineral is going to the United States.”
In May, Nutrien announced plans for a major terminal in the Pacific Northwest. Within Canada, only Vancouver and Prince Rupert fit Nutrien’s criteria: a deep-sea port with rail infrastructure.
Regulations, taxes and approval timelines would influence the company’s decision about whether to choose the U.S. or Canada, Nutrien chief executive officer Ken Seitz told The Globe and Mail at the time, offering Ottawa an opportunity to deliver on its promises to invigorate the Canadian economy by attracting investment in resource extraction and critical minerals.
Potash is a critical mineral essential to all major agricultural production worldwide. It is also one of Canada’s key levers when it comes to global trade. Mines in Saskatchewan account for more than 30 per cent of global production, more than any other country.
In October, Mr. Carney committed to doubling non-U.S. exports, from around $300-billion to around $600-billion. Potash is Canada’s fifth-largest export, and Nutrien is forecasting global demand to climb from 72 million tonnes annually to 80 million by the end of the decade. This growth will be driven by fast-growing markets in Asia, including China, India and Japan.
But it’s likely a U.S. port will ship out most of Nutrien’s Canadian potash to these overseas markets. The Port of Vancouver Neptune terminal will still account for the largest share of Nutrien’s potash terminal capacity at 11 million tonnes a year. Saint John and Thunder Bay account for almost four million tonnes a year in capacity, combined.
However, capacity at Portland, Ore., combined with Longview exports will amount to 13 to 14 million tonnes a year.
Nutrien assessed options across the Pacific Northwest based on a matrix of 30 criteria, chief commercial officer Chris Reynolds told The Globe and Mail on Wednesday. These criteria included rail rates, freight costs and construction costs.
The 97-year-old Berth 4 at the Longview port consistently “came out on top,” he said.
Washington has some strategic advantages, said Barry Prentice, a professor of transportation and supply chain management at the University of Manitoba. It has sizable capacity and because Nutrien already ships potash out of Portland, the company has established supply chains and labour relationships. A dedicated berth also means Nutrien will have autonomy and predictability.
In comparison, Prince Rupert and the Port of Vancouver have significant disadvantages, said Peter Hall, a professor of urban studies at Simon Fraser University.
Prince Rupert is only serviced by one railway and is typically used as overflow for bulk exports from Vancouver. Space at the Port of Vancouver is also increasingly limited. The railways also face congestion into the port: moving product into terminals on the North Shore means trains must cross a single rail bridge.
Canadian railways and the Port of Vancouver have also become less reliable recently because of labour stoppages.
However, these challenges are problems to be solved, not excuses to lose investment, said John Corey, president of the Freight Management Association of Canada.
Mr. Carney’s government has promised to tackle big problems and build big things. This requires Ottawa to prioritize supply chains, he said.
New bridges for rail lines, a framework for labour disputes and inland ports are needed if Canada is to attract investment and expand trade, Mr. Corey said.
“We’re already 10 years behind. We’re already playing catch-up. Sometimes the best thing to do is just rip the bandage off and go for it.”
Ottawa also could have offered tax breaks and regulatory assurances to Nutrien, Ms. Exner-Pirot said.
Mr. Reynolds told The Globe and Mail on Wednesday that the company was courting incentives from the Port of Longview. The company did not comment on whether it sought assurances or incentives from Ottawa.
However, it is clear Nutrien was in discussions with the federal government. In September of this year, Nutrien met with numerous ministries and government officials, according to the federal lobbyist registry.
International trade, infrastructure, economic development and transportation were the subjects commonly discussed.
“I just can’t believe that we didn’t spend some time in the last few months trying to sweeten the pot so that we might maintain control over that strategic mineral,” Ms. Exner-Pirot said.
Instead, Ottawa has focused on major projects Ms. Exner-Pirot characterizes as political. For example, the Port of Churchill has no private terminals and major commodities like grain and potash will not be shipped out of the location, industry associations have told The Globe and Mail.
“What other signals are we waiting for to start addressing these things?” Ms. Exner-Pirot said. “I would like to see some urgency in addressing our port and rail labour issues, our supply chain and logistics challenges.”
The Ministry of Science, Innovation and Economic Development did not respond before deadline to numerous requests for comment from The Globe and Mail.
This article was first reported by The Globe and Mail
