Wednesday’s decision by PotashCorp to reduce production and eliminate more than 100 jobs at a mine near Saskatoon is the tough, but right move to make for the company’s shareholders, according to an investment adviser.
“From a business and economic stand point, it makes perfect sense why you would end up doing it,” Sean Meshke, an investment adviser at Prairie Wealth Management, said in an interview Thursday.
“It is hard when it’s the Saskatchewan economy and it’s your friends and family that are being laid off work.”
READ MORE: PotashCorp cuts jobs, production at Cory potash mine
On Wednesday the company announced 100 permanent and 40 temporary positions would be cut at its Cory mine. A company spokesperson said the move was part of an overall strategy to “match supply to demand.”
Get daily news
The price of potash has dropped roughly 75 per cent since its height in 2008. Meshke said the trend could continue, as there’s still “excess supply in the market,” however the price’s bottom will likely come soon.
“I think we’re closer to the end of the ball game, so to speak, than we are to the beginning,” he said.
READ MORE: Agrium and PotashCorp shareholders overwhelmingly approve all-stock merger
Industry expert Brooke Dobni said he agreed that potash’s price likely won’t drop much further, but added that he “wouldn’t be surprised” if more job and production cuts are on the horizon.
However Dobni said the long term forecast for the potash industry is positive. The mineral is a part of crop production and many experts believe it’s importance will increase as the global population increases.
“I think it will equalize, it will be stabilized,” Dobni said about potash’s future.
“It’s a great industry, we have lots of reserves in this province and it’s going to bode our province well going forward.”