Multi-billion-dollar Sask. mine an 'informed gamble' that could pay off big for region, expert says
SASKATOON -- Keith Willoughby likens BHP’s $7.5 billion bet on the Jansen potash mine to a hockey team drafting a player who might not play for years.
It’s an “informed gamble.”
“You have no idea in seven years what the condition of the team is going to be like, what the condition of the player is going to be like,” said Willoughby, dean of the Edwards School of Business at the University of Saskatchewan.
“I guess we have to defer to the expertise of BHP and other companies like Nutrien and Mosaic that have done this, that we assume they've done their due diligence with the preparation of looking at demand forecasting.
“But again that's the challenge in all of this. That's where it's a bit of a crystal ball, in terms of yes we're building supply now, but it doesn't materialize for a while. What will the demand look like in 2027, 2028, 2029? Again, anybody's guess on that topic.”
He said new head office jobs will cause a “multiplier effect” of people moving to the city and the province, creating a foundation for economic growth, he said. The mine will “entrench” the position of Saskatchewan - which already accounts for 30 per cent of the world’s production of potash - as a leader in the industry.
The announcement that construction is going ahead will also create good vibes, which he said are also important.
“I am convinced that if you look at the business barometer of this province and the economic barometer, people see these signals and it's important. We're going through right now, obviously, a pandemic that all of us have been impacted by. We've seen one of the worst droughts ever in this province.
“So this is news right now that is really good for our psyche, if you will, as a province, it's good for the business opportunity, it will create jobs and have an opportunity of providing economic development.”
Still, he doesn’t see it as indicating a 2007-style economic boom in Saskatchewan.
“I think circumstances are much different. We've gone through a pandemic and we're still going through the aftermath, if you will, of the pandemic's impact. I think this speaks to very positive news for the province.
“I'm not sure I would go out and suggest that it's the bellwether for a boom that's going to appear that's going to be similar to what we had seen over a decade ago.”
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