Fair Return on our Resources

Last year, PotashCorp made $1.8 billion from our potash resource. In return, they paid just $76.5 million in royalties. The Sask Party has said they
are satisfied with this royalty structure.
The CEO of PotashCorp acknowledges that there is now a “new norm” in
terms of global demand for potash. Because of this “new norm”, there is a
growing call from various parts of the political spectrum for a review
of our potash royalty structure.
A columnist in the Leader-Post wrote: “The right royalty structure is
complicated. But the fact that PotashCorp earned $1.8 billion last year
and only paid back $76.5 million in royalties to Saskatchewan people
suggest we might not have it quite right yet” (Leader-Post, Feb 12/11).
According to Dr. Jack Mintz from the School of Public Policy at the
University of Calgary, Saskatchewan’s current system is “just wrong.”
Dr. Colin Boyd, a professor at the Edwards School of Business at the
University of Saskatchewan has questioned whether our current royalty
structure is ensuring that we are “fairly sharing” in the profits which
potash companies are making here.
Dr. Sylvain Charlebois, associate dean in the School of Management
and Economics at the University of Guelph and a former professor at the
University of Regina, says a review of our province’s royalty structure
is “dearly needed” (The StarPhoenix, Feb 17/11).
But the Sask Party government has said they will not review the royalty structure.

Unrest in Bill’s Republic of Doyle

Posted by Erin Weir under big business, corporate income tax, media, potash, Sask. Election 2011.

November 1st, 2011

PotashCorp CEO Bill Doyle waded into Saskatchewan’s election campaign on Friday with an op-ed in the province’s two largest newspapers. It was accompanied by a paid advertisement from PotashCorp in Saskatoon’s StarPhoenix.

The company got some free advertising in Regina’s Leader-Post through Bruce Johnstone’s column, which repeated Doyle’s op-ed. The Saskatchewan Party is parroting the same lines. (more…)

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Sask Party Shills for PotashCorp

Posted by Erin Weir under corporate income tax, media, ndp, potash, Sask. Election 2011.

October 28th, 2011

Yesterday’s strong earnings report from the Potash Corporation of Saskatchewan confirms what this blog and the NDP have been contending: even modestly increasing Saskatchewan’s extremely low royalties on hugely profitable potash mines could fund substantially better provincial public services. (more…)

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We come first

By Eldon Sweet, The StarPhoenix November 3, 2011

Checking the news on my smartphone, I see that PotashCorp had another record profit of $826 million in the last quarter. I also see Dwain Lingenfelter is visiting a soup kitchen in Moose Jaw.

What’s wrong with this picture? The recipients of the goodwill of the soup kitchen are Saskatchewan citizens, but the recipients of the record profits from Saskatchewan’s potash are not.

We are giving away our potash to corporations that just want to turn a fast buck and make billions in our province. When the potash is gone, so will they. We have to get what we can, while we can.

I feel if PCS didn’t make contributions to political parties and the users of the soup kitchen did, Brad Wall would do what’s best for the soup recipients. We need to start looking after our own and taking care of “us,” the people of Saskatchewan, not the corporations of Wall Street.

Eldon Sweet

Read more: http://www.thestarphoenix.com/technology/come+first/5649003/story.html#ixzz1claw7vSh

Read it as a PDF: We come first

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Room to alter potash royalties

living skies lost

By Erin Weir, The StarPhoenix November 1, 2011

Weir is an economist with the United Steelworkers union, which represents most of Saskatchewan’s potash miners.

Potash royalties are a major election issue. In his viewpoint article, Tax, royalty rates boost growth (SP, Oct. 28), PotashCorp CEO Bill Doyle argued that his company pays about 30 per cent of profits in royalties and taxes.

However, lumping together royalties and corporate taxes does not change the conclusion that Saskatchewan should raise potash royalties.

According to the Energy and Resources Ministry’s latest annual report, the province in 2010 received only $263 million from $5.6 billion of potash sales. By comparison, the government received $306 million from $2.2 billion of potash sales in 2004. Since the industry produced less potash in 2010 than it did in 2004, the entire $3.4-billion increase in annual sales reflected higher prices for potash.

The NDP platform modestly assumes that an improved royalty regime could collect at least one-fifth of this windfall profit.

The Saskatchewan Party opposes any royalty increase.

The above revenue figures include Saskatchewan’s Crown royalty and potash production tax. These potash-specific charges, which can be considered “royalties,” amounted to just five per cent of potash sales last year.

Doyle boosted this fraction to 30 per cent by adding federal and provincial corporate taxes to the numerator. He also reduced the denominator to potash profits from potash sales.

His approach implicitly assumed that the value of Saskatchewan’s potash, beyond mining and transport costs, belongs to private operators. From that premise, 30 per cent might seem like a reasonable tax rate.

But potash belongs to the people of Saskatchewan, even if the mining companies are private.

In effect, the province is giving 70 per cent of the return on its potash to these multinational corporations, and a further portion to the federal government.

Saskatchewan can, and should, keep a larger share.

A closer look at corporate taxes reinforces the case for higher royalties. The only remaining component of Saskatchewan’s corporate capital tax is the resource surcharge, which has been cut to three per cent of resource sales, from 3.6 per cent in 2006. (more…)

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PotashCorp’s Q3 windfall spurs political debate

Plenty at stake for voters

By David Hutton and Jason Warick, The StarPhoenix October 28, 2011

The near-record, third-quarter earnings of $826 million announced by Potash Corp. of Saskatchewan Inc. further stoked the heated potash royalty debate between the Saskatchewan Party and New Democratic Party

Potash has quickly become the dominant issue of the provincial election campaign, which culminates with the Nov. 7 vote. Both Saskatchewan Party Leader Brad Wall and NDP Leader Dwain Lingenfelter agree billions of dollars – and the economic future of the province – are at stake as they make their case to the electorate. (more…)

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Potash profit doubles on record sales

Saskatoon— The Canadian Press

Published Thursday, Oct. 27, 2011 6:33AM EDT (Last updated Thursday, Oct. 27, 2011 11:09AM EDT)

Potash Corp. of Saskatchewan Inc.’s POT-T profit more than doubled in the latest quarter on higher production and record sales.

The world’s largest fertilizer producer reported early Thursday its net income jumped to $826-million (U.S.), or 94 cents per share in the three months ended Sept. 30.

That was more than double the 38 cents per share, or $343-million in profit the company earned in the same quarter last year. (more…)

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PotashCorp earns US$826 million in Q3

27/10/2011 7:47:00 AM

The Canadian Press

SASKATOON – Potash Corp. of Saskatchewan Inc. (TSX:POT) more than doubled its profits in the latest quarter on higher production and record sales.

The world’s largest fertilizer producer reported early Thursday its net income jumped to US$826 million, or 94 cents per share in the three months ended Sept. 30.

That was more than double the 38 cents per share, or $343 million in profits the company earned in the same quarter last year.

Sales in the quarter jumped to US$2.3 billion from $1.58 billion last year as the company cashed in on growing demand for fertilizer in China, India and other parts of the world.

PotashCorp, which reports in U.S. dollars, said record third-quarter sales and significantly higher prices raised potash gross margin to $700 million – the second-highest third-quarter total in company history.

This raised gross margin for the year to $2.2 billion, well ahead of the $1.3 billion earned in the first three quarters of 2010.

Production in the quarter hit a record 1.9 million tonnes, up from 1.3 million tonnes a year earlier.

The company says offshore potash demand remained robust during the third quarter and on pace to achieve record levels in 2011.

PotashCorp president and CEO Bill Doyle said the “undeniable need for potash, phosphate and nitrogen” ensured products moved through the system to reach farmers around the world.

“Our third-quarter performance reflected the unrelenting pressure on global food production – and the strength of our growing fertilizer enterprise.”

After the rejection of BHP Billiton’s hostile $40 billion bid for PotashCorp last year, the Saskatoon company has moved ahead with expansion plans and developments to boost supply.

And despite recent weakness in the global economy, the prospects remain bright for the industry.

“Despite economic uncertainty around the world, a growing population has and will continue to need more food and, ultimately, more fertilizer,” added Doyle.

“By recognizing this powerful long-term trend and making the commitment to be prepared for growing demand, especially for potash, we anticipate new opportunities in the years ahead. Our expanding operational capability will be increasingly valuable – in helping grow global food production and in serving the interests of all stakeholders in our company.”

Read it Online: PotashCorp earns US$826 million in Q3

Read it as a PDF: PotashCorp earns US$826 million in Q3

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Revenue idea merits debate

The StarPhoenix October 15, 2011

The sharing of resource revenues with Saskatchewan’s First Nations is too important an issue to be tossed out during a provincial election campaign, seemingly without any further consideration than it seems a good idea.

NDP Leader Dwain Lingenfelter certainly is right to raise the subject, which is worthy of serious debate in a province whose rapidly growing First Nations segment constitutes about 15 per cent of the population today and is projected to rise as high as 30 per cent by mid-century. (more…)

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Revenue idea merits debate

The StarPhoenix October 15, 2011

The sharing of resource revenues with Saskatchewan’s First Nations is too important an issue to be tossed out during a provincial election campaign, seemingly without any further consideration than it seems a good idea.

NDP Leader Dwain Lingenfelter certainly is right to raise the subject, which is worthy of serious debate in a province whose rapidly growing First Nations segment constitutes about 15 per cent of the population today and is projected to rise as high as 30 per cent by mid-century. (more…)

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Re-examine the status quo

By John W. Warnock, The Leader-Post October 3, 2011

There has been discussion recently about the rate of return the people of Saskatchewan receive for the extraction and sale of our non-renewable natural resources.

Unfortunately, our governments have not informed the general public on this issue. How does this province compare to other political jurisdictions that are dependent on resource extraction?

Commonly, the term “royalties” is used to describe the return to the owners of the resources, but all political jurisdictions use a variety of policy tools.

We can get a general picture of our situation by looking at the total effective rate of return in a few mining jurisdictions, using a model prepared by the World Bank: (more…)

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