One day after the provincial government announced it’s open for potash mining, the mineral resources minister tempered expectations that a shaft is about to be sunk any time soon.
"We’re being cautiously optimistic on this," Dave Chomiak said. "I don’t want to raise people’s expectations, because as we know, many people have gone out and predicted a mine and nothing has happened."
Chomiak said potash estimates in Manitoba on the western border with Saskatchewan could support a "medium-sized mine."
The province recently consolidated mineral rights in the area that could make it feasible for a company to build a mine in the area, he said, adding that royalties could generate $2 billion over the next four decades.
But it’s a song and dance that RM of Ellice CEO Rick Fouillard has heard before.
"They’ve been talking about a mine for 40 years and in our estimation it’s a red herring," said Fouillard, who is the CEO of Ellice and the Village of St. Lazare, which will be amalgamating for the 2014 municipal election.
The RMs of Ellice and Russell, which is directly to the north, have the majority of the potash reserves in the province.
A mine across the border in Rocanville, Sask., only 15 minutes away, is undergoing a massive expansion, costing approximately $3 billion and increasing its production from three million tonnes to 5.7 million tonnes of ore per year.
St. Lazare is the third-largest contributor of employees to the mine, with approximately three dozen families coming from the village or the RM.
While the investment from PotashCorp in Rocanville demonstrates how experts feel about the availability of potash in the area, the commodity has fallen in price recently.
After a massive price spike starting in 2007 and lasting until 2009, where potash climbed as high as $1,100 per metric tonne due to increased global demand, the commodity has fallen dramatically and now sits slightly above $300 per metric tonne.
Less than eight months ago, PotashCorp cut its workforce by 18 per cent.
The decision affected more than 1,000 jobs, with 440 positions cut in Saskatchewan.
The majority of those job losses occurred at the Lanigan mine, where one of two mills will suspend production, and the Cory mine, where production will be scaled back.
Fouillard said potash reserves have been growing while prices have fallen.
"There are piles of potash in storage right now," Fouillard said.
Should the mine take off, it may come at the cost of another lucrative industry.
Drillers have recently struck oil in the new Birdtail Field, south of Russell.
While much of the land could still be used for oil exploration, Chomiak said in Saskatchewan there is a moratorium on the oil industry within certain parameters of any potash mine.
"(Oil and gas and potash) don’t go hand in hand, and you are in a situation where you would probably have to do one or the other," he said.
» Twitter: @CharlesTweed