'Pennies on the dollar': Sask. should be getting more from companies mining its potash, paper finds

Potash companies operating in Saskatchewan are not paying enough royalties to the government, according to a research paper from the Johnson Shoyama Graduate School of Public Policy.

The paper points to a $10 billion revenue windfall in 2022 with the province collecting only one-quarter of the windfall, but didn’t recommend how much royalties should be increased.

The author of the paper, Erin Weir, said had the government captured all the windfall profit, it could have paid off debt or issued affordability cheques to all residents. The paper stated that royalties and taxes be improved to “ensure a fair return to Saskatchewan people."

“It amounts to $8,500 for every man, woman and child in Saskatchewan,” he said.

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Weir said companies are currently only paying the Crown royalty and a surcharge, which is about three per cent.

“Then the resource surcharge also which again is about three per cent. So on a lot of the potash extracted from Saskatchewan the province is really only getting pennies on the dollar,” he said.

The paper said that even with prices moderating in 2023, the value sold already exceeds 2021 and every previous year.

Saskatchewan has about one-third of the world’s potash supply.

“Last year’s windfall highlights the need to collect a fair return for the people of Saskatchewan, who own the resource, from the mining companies that extract it,” the paper says.

The potash industry paid $3.1 billion in royalties in 2022, nearly three times what it paid a year earlier. The mining industry says more than royalties need to be considered.

“Over 6,000 jobs in the potash sector alone, very high paying jobs. You look at the amount of procurement to Saskatchewan suppliers,” said Pam Schwann, president of the Saskatchewan Mining Association.

The Saskatchewan government speaks of maintaining competitiveness. In a written statement, it says almost all Saskatchewan potash is exported to international markets where our producers compete with low-cost product largely from Russia and Belarus.

Eric Cline is a former Saskatchewan energy minister who will release a book on the topic in March.

"I would recommend that there be a public inquiry to determine what the appropriate balance should be between the companies and the government of Saskatchewan on behalf of the public,” he said.

The government feels that currently there is a balance between collecting potash revenues and maintaining jobs. It makes no mention of contemplating a royalty review.

The entire paper can be read here.