Canadian Government Pressures Nutrien to Shift Strategy on U.S. Potash Facility
Ottawa says it is disappointed with Nutrien’s NTR-T decision to spend up to $1-billion to build a potash export terminal in the United States and is hoping to persuade the Saskatchewan-based fertilizer giant to change course and invest in Canada.
Transport Canada will meet with Nutrien’s executives and project management team in the coming weeks and try to “convince them to change their mind,” Transport Minister Steven MacKinnon said Friday.
The potash producer began looking at U.S. and Canadian locations for its new terminal in the Pacific Northwest a year ago. On Wednesday, the company announced it had chosen a port in Longview, Wash. – a move critics have called a failure for Prime Minister Mark Carney’s government.
Ottawa has promised to streamline the approvals process for building large resource and infrastructure projects. It has also committed billions to improving transportation links in a bid to double non-U.S. exports to around $600-billion from about $300-billion.
Potash is Canada’s fifth-largest export. Should Nutrien proceed with its plan, by 2031, it will be shipping as much Canadian-mined potash to fast-growing markets in Asia through U.S. ports as through Canadian ports.
“Saskatchewan potash should be moved out of a Canadian port,” Mr. MacKinnon said at a Friday news conference in Brampton, Ont. where he was speaking about the $6-billion Ottawa has promised to invest in trade infrastructure
He said he spoke with Nutrien chief executive officer Ken Seitz after the company’s announcement, as well as Saskatchewan Premier Scott Moe to “discuss a potential response to this.”
In a follow-up interview with The Globe and Mail, he said he invited Mr. Seitz to meet with officials from across the government: “We’ll hopefully persuade [him] to change [his] mind. But at minimum, understand what led to this decision,” he said.
Nutrien has been looking for an export terminal to handle five to six million tonnes of annual potash exports, and had been considering both Canadian and U.S. ports. On this side of the border Vancouver and Prince Rupert fit the criteria with their deep-sea ports and rail infrastructure.
In an interview on Wednesday, chief commercial officer Chris Reynolds said the company looked at a total of 30 factors, including rail rates, freight costs and construction costs. The 97-year-old Berth 4 at the Longview port consistently “came out on top.”
The company already ships potash out of Portland, Ore., and has established supply chains and labour relationships in the U.S. Pacific Northwest.
The company had extensive contact with the federal government over the past six months. In September, Nutrien representatives met with numerous departments, including Finance Canada, Export Development Canada, and Innovation, Science and Economic Development, according to the federal lobbyist registry.
On Sept. 29, the company spoke with Minister of Finance François-Philippe Champagne.
Mr. MacKinnon said he’d been “taken by surprise” by Nutrien’s decision. However, sources familiar with the matter told The Globe and Mail that Nutrien informed Ottawa in September that it was likely to select the Washington port. The Globe is not naming the sources because they are not authorized to speak publicly on the matter.
Mr. MacKinnon said there had been “internal confusion” as to which department Nutrien informed.
“The company obviously had engagements with the federal government. Unclear whether they spelled out their criteria. How they were analyzing or thinking about this decision, or, for that matter, what Canada could have done to make that better, or what a port corporation could have done, what a railway could have done,” he said.
One thing the company asked for, he said, was a dedicated berth for the company’s exclusive use – something Nutrien plans to build at the Longview port.
He did not say whether a Canadian port could offer this space, but said the federal government is committed to investing in port infrastructure.
“Look, we’re going to be expanding the Port of Vancouver. Prince Rupert is available. Saint John has capacity for potash; I know that that doesn’t always work to go east,” he said.
However, these investments will take time to come on line and there is not space at the Port of Vancouver comparable to what is on offer in Washington, said James Nolan, a professor of transportation economics and industrial organization at the University of Saskatchewan.
Prince Rupert has more space than the Port of Vancouver, he said. But CN Rail owns and operates all tracks to the northern port, while the port of Longview is serviced by both Burlington Northern Santa Fe Railway and Union Pacific.
If the decision wasn’t happening against the backdrop of a trade war with the United States, Nutrien’s move south of the border would be cast as “a rail transport issue, not a political issue,” Mr. Nolan said.
Regardless, it should act as a wake-up call, said John Corey, president of the Freight Management Association of Canada in an interview this week.
Mr. Carney’s government has promised to tackle big problems and build big things. This requires Ottawa to prioritize supply chains, he said. That means building new bridges for rail lines, a framework for labour disputes (there have been numerous recent disruptions at ports and railways) 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.”
The Canadian mining giant itself is pressed for time. Australian mining giant BHP is set to open its Saskatchewan-based Jansen mine by mid-2027. When all phases are complete, the mine will produce 8.5 million tonnes of potash every year.
Growth into Asian markets will also require Nutrien compete with Russian and Belarusian potash exports, where production is less expensive. The costs of transporting potash exceed the costs of mining it, Mr. Reynolds told The Globe and Mail Wednesday.
“It’s really critical we get this right in terms of globally competitive, efficient and resilient supply chains.”
This article was first reported by The Globe and Mail
