SASKATOON – Saskatchewan’s resource-based economy is taking a hit due to low oil prices. Now some analysts are saying another provincial commodity may be heading for a slow year.
The future of potash is strikingly different, depending on whom you ask.
Potash industry executive David Waugh isn’t sure about a recent Royal Bank of Canada prediction that says potash production will rise next year in Saskatchewan.
“I would say that they would probably want to reissue that right now,” said Waugh, who is the CEO of North Atlantic Potash.
RBC’s report contradicts a prediction by Macquarie Research. The firm reportedly told investors this week that potash demand will decline next year.
“It’s like trying to predict the federal election, everybody’s got their opinions on what’s going on,” said Brooke Dobni, a University of Saskatchewan business professor.
Dobni said analysts look at business cycles and growth in countries where potash is sold when making predictions.
However, there is also an unknown component.
“The one thing the analysts don’t know is what’s going on inside the boardrooms and the ‘C’ suites of these companies when they’re talking about supply, how much they’re going to bring on,” saod Dobni.
READ MORE: Mosaic curbs potash production in Saskatchewan because of weaker prices
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Those conversations may have recently taken place at Mosaic. In a move that may signal a soft potash market, the company announced a reduction in output at its Colonsay mine east of Saskatoon.
Waugh use to work at Mosaic and said the decision may trigger similar measures elsewhere.
“More than likely we’ll see other producers adjust their production forecasts as well,” said Waugh.
It’s a decision Waugh doesn’t have to make yet. North Atlantic Potash is exploring a mine site near Regina which Waugh said wouldn’t begin production until 2021. He estimates the market will look a lot different then.
“We think the markets are going to grow two to three per cent a year, our projection would be the price will be substantially higher,” stated Waugh.
Joel Senick contributed to this story
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