When potash comes to town


giant potash mines come with benefits, responsibilities


Managing the boom | Saskatchewan’s potash boom is unleashing enormous rural development. Existing mines are expanding and 20 companies are exploring potash deposits. Work has begun on two new mines, K+S Potash Canada’s Legacy project north of Moose Jaw, and BHP Billiton’s enormous Jansen Lake project southeast of Humboldt. They require road construction, hundreds of building permits and an unheard-of level of planning and oversight by local government. As The Western Producer’s Karen Briere learned, affected rural municipal governments are on a steep learning curve to keep up.

Saskatchewan’s potash boom is unleashing enormous rural development. Existing mines are expanding and 20 companies are exploring potash deposits. Work has begun on two new mines, K+S Potash Canada’s Legacy project north of Moose Jaw, and BHP Billiton’s enormous Jansen Lake project southeast of Humboldt. They require road construction, hundreds of building permits and an unheard-of level of planning and oversight by local government. As The Western Producer’s Karen Briere learned, affected rural municipal governments are on a steep learning curve to keep up.

LEROY, Sask. — Jerry McGrath and Bruce Elke knew things were about to change when a seismic company arrived five years ago and began scoping out an area around Jansen Lake.

It was no secret there was potash underground. The two farmers and reeves of the rural municipalities of LeRoy and Prairie Rose, respectively, live in central Saskatchewan’s potash belt, where Potash Corp. has operated a mine at nearby Lanigan for decades.

What they didn’t know was how much they would be involved in developing a new mine proposed by Australian mining giant BHP Billiton.

The province issues exploration permits, leases and environmental approvals and either SaskWater or Saskatchewan Watershed Authority are involved in securing a water supply. However, then the responsibility switches to RMs.

“We were surprised to find out we had as much jurisdiction as we did,” said Elke.

Proper zoning, hundreds of building permits, road maintenance agreements and tendering all fall under their purview.

For the two reeves, the learning curve has been more like a line pointing straight up.

“We should have been on it right away,” McGrath said at the Saskatchewan Association of Rural Municipalities midterm convention last fall, where he urged other municipalities to educate themselves, and fast.

The province’s potash industry is booming.

The existing 10 mines, owned by three companies, are all expanding with a targeted completion date of 2020.

“We’re part way through a doubling of our industry, just based upon the existing players,” said Kent Campbell, the provincial government’s deputy minister of energy and resources.

However, he said 20 companies, including the three largest miners in the world, hold 181 mineral dispositions covering 10.82 million acres. Although existing mines had expanded, there had not been a new potash mine since 1970. But now, new mines are a certainty.

Therein lies one of the main difficulties for RMs.

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Community development plans didn’t contemplate new mines. Councillors and administrators have no experience with development of this scale, and there is no knowledge base to turn to for advice.

“We are sort of breaking new ground,” said Elke. “It is overwhelming.”

McGrath said they would like other RMs to have it a little easier.

“We need a template so we don’t have to reinvent the wheel,” McGrath said. “We were 98 percent agriculture. Now we’re going to have the biggest mine in the world.”

BHP Billiton’s Jansen Project, when at full capacity, would indeed be the largest potash mine on the planet.

The $12 billion conventional underground mine will be situated at the southern edge of the RM of LeRoy near its border with Prairie Rose. It would produce eight million tonnes of potash a year for at least 50 years. By way of comparison, Potash Corp.’s Lanigan mine, its largest, had an operational capability in 2011 of 3.4 million tonnes.

Although the Jansen mine hasn’t officially received the go-ahead — a decision is expected by October — BHP has already committed spending $1.2 billion, and two mine shafts are being drilled in the expectation that the mine will open in 2015.

Chris Ryder, BHP’s vice-president of external affairs, said the company is aware that the workload for RMs goes up significantly when a new mine is built and tries to help where possible.

He said the RMs have been helpful but challenged.

“Don’t underestimate the capacity required to go through the development permitting and the regulatory process,” he advised.

“We’re going to in the future be looking for 600 or 700 building permits running through two RMs. That’s in the period of a year or two. Clearly on top of the regular work they’re doing for ratepayers, they’ve got a lot of work to do just for our project.”

LeRoy and Prairie Rose have both hired additional staff, and BHP has provided funding to pay salaries.

LeRoy administrator Joan Fedak said the work has been challenging because of the unknowns.

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“We relied heavily on the legal advice, engineering advice and planning advice from SARM,” she said.

Bylaws had to be changed, roads closed or built and planning statements examined.

For example, LeRoy’s community plan allowed for mineral extraction but not processing. Before it was amended, the plan also did not allow for work camps, but BHP requires one to house more than 2,500 employees during construction.

The camp will be the largest, albeit temporary, community in the area, second only to the city of Humboldt. Complete with gymnasium and movie theatre, it will be responsible for many of the permits Fedak will handle.

She said few RMs likely have work camps as permitted uses in their bylaws because they simply didn’t consider the possibility.

“Any RM that is primarily agriculture based would have the same issues,” Fedak said. “Hopefully others can be better prepared.”

The RM of Dufferin, which is home to the K+S Potash Canada Legacy Project near Bethune, Sask., had to change its regulations to accommodate the mine. The $3.25 billion solution mine is the only new potash development with formal approval.

Preliminary construction on services has already begun, but an official groundbreaking ceremony is set for June and the opening scheduled for late 2015.

RM administrator Rodney Audette said the permitting process is onerous, but it also provides a record of activity, which could help other municipalities in the future.

“There is a development permit and then every improvement from there on has to have a permit,” he said. “It allows for a review of what’s going on.”

Streamlining processes and regulations could make it easier on everyone.

Fourteen rural and urban municipalities in the Mid-Sask Municipal Alliance, which includes LeRoy and Prairie Rose, are now working together to update their bylaws as a region and be ready for future development.

McGrath said a regional approach would put neighbouring municipalities on the same footing and help companies that must now check regulations every time they cross an RM boundary.

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