A review of Squandered – Canada’s Potash Legacy
What’s better than shutting down Zoom, grabbing a case of your favourite brew and a couple packs of Cheezies, and heading off to the lake with a good book or two? The only question is what to read?
Well, let me recommend a good one!
To separate politics from potash in Saskatchewan would be like separating conjoined twins connected at the head, heart, abdomen, hip, and leg; it’s impossible!
For this reason, it’s hard to write a Saskatchewan potash history that does not interweave throughout its narrative a strong political flavour. It’s not that the potash story has been politicized; rather, it is that politics is fundamental from its birth.
I’ve noticed that there has been some increased attention focused upon resource royalty and taxation issues, although not as much as I would have expected, given that this is an election year in Saskatchewan. One event that created a ripple was the publication of a book by former NDP cabinet minister Eric Cline. The book, entitled Squandered – Canada’s Potash Legacy, was released in March 2024.
Cline practiced law in his hometown of Saskatoon prior to serving 16 years in the Saskatchewan legislature where he held several senior cabinet positions, including the portfolios of health, finance, and industry and resources. After his retirement from public service, he worked for 12 years as a corporate executive in the mining sector before setting up an arbitration practice and working as a fused glass artist. Given this background, Cline is highly qualified to sift through not only the opacity but also the complexity of Saskatchewan potash production, sales, taxation, and policy, and it would be an error to dismiss his work as being simply a matter of partisan politics.
On a recent business trip, I had the opportunity to spend some undisturbed time with the book. It is an easy weekend read, largely due to Cline’s simple and straightforward writing style. He is a clear and concise communicator, and demonstrates, time and again, his ability to render complex technical and financial issues into explanations easily understood by the layperson.
Cline’s basic thesis is that while industry profits rose exponentially, the public’s share of those profits remained stagnant, at about one-quarter to one-third. What would be fairer would be a structure that if the industry share rose exponentially, so to would the public share, which is the theory of economic rent.
The theory of economic rents for the extraction of resources is that companies should make a reasonable rate of return on investment and the balance goes to the resource owners (p.95). The justification for this approach is the unique position Saskatchewan enjoys with respect to potash. “To say that Saskatchewan is the Saudi Arabia of potash is no exaggeration; in fact, it is an understatement” (p.6). Given this natural wealth provides the government with a strong negotiating tool – it can be more assertive, as “you cannot pick up and move the mine”.
In the introductory chapters, Cline presents a continuation of Saskatchewan’s potash history, somewhat overlapping John Burton’s book, Potash – An Inside Account of Saskatchewan’s Pink Gold, but bringing to light more detail on BHP Billiton’s failed 2010 bid for PotashCorp, and also closely examining the subsequent merger of PotashCorp with its competitor Agrium Inc. to form Nutrien in 2018. He brings the history forward to Russia’s invasion of Ukraine in 2022 and explores somewhat BHP Billiton’s decision to build the Jansen mine.
The heart of Cline’s analysis is Chapter Eight, “The Profits of Potash”, and the attached Appendix A “Value of Potash Sales and Payments to Public Treasury, 1962 – 2022” and Appendix B “Potash Production Volume and Average Price, 1997 – 2022”. Cline spent considerable time researching the public filings and annual reports of the major producers, including Nutrien, Agrium, the now-defunct PotashCorp, and Mosaic, to prepare tables that present year-by-year data such as potash sales, gross profit, realized price, etc. From a public policy perspective, he presents database analyses of industry and public shares of profits, using the province’s own royalty and tax structure. It is worth buying the book, if only for this data, and I thank Cline for this most useful summary.
However, the book is more than a technical and financial treatise; Cline is also an impassioned Saskatchewan patriot and spokesperson. Chapter Nine presents Cline’s solution to the discrepancy between “producer profits and the people’s share” by offering several solutions and ends the book by making an impassioned case for the impact this “shortfall” makes upon the lives of Saskatchewan’s citizens. It is in these two chapters that Cline demonstrates his deep Saskatchewan identity and a compassion for people that no doubt was the root of his public service career.
As often happens, books such as these immediately create an alienation in the popular media, as those to the left argue for elimination of an injustice and those on the right state that it is business that elevates the people by means of employment and the purchase of services. Nevertheless, this does not negate one of Cline’s recurring themes in the book: the potash sector is a huge moneymaker. His demonstration of this fact makes the book of singular importance.
In closing this review, I offer two observations derived from Cline’s work: his analysis expresses volumes using two units – “K2O” and “KCl”. As followers of my column know, the measure used by the province is K2O, the standard dating back to the inception of the industry in the late 1940s. Industry uses the other measure, as this reflects product tonnes. Cline is scrupulous in his analysis not to directly compare volumes using one standard against volumes expressed in the other, although at first, I did question whether his stated “discrepancy” between the provincial and industry volumes may have originated from such a confusion. For those of you who intend to buy the book, if for nothing else other than its statistical data, keep this in mind.
The second observation is one derived not only from his work, but also derived from the authors that he quotes. There is the presupposition that the original owners of the resource are the same owners we see today, i.e., the “settler colonists” who came and populated Saskatchewan at the turn of the 20th century onward. This is not accurate, as when the settler colonists arrived, in all cases they saw there already were people here, these being the original owners – Saskatchewan’s Indigenous peoples. Perhaps if there is a question to be asked it is this: “What should the direct benefit be to Saskatchewan’s Indigenous people within whose traditional territories potash development occurs?” However, this is material for another book.
‘Nuff said!
Eric Cline, 2024, “Squandered – Canada’s Potash Legacy”, published by University of Regina Press, 170 pp
