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Jan 12, 2009

Mosaic lays off 1,000 in Saskatchewan

Mosaic Co. confirmed Monday it will lay off more than 1,000 workers at its potash mines in Saskatchewan due to slow fertilizer demand, the global credit crisis and growing potash inventories.

Layoffs notices were set to 360 hourly employees at Mosaic's Colonsay mine east of Saskatoon on Thursday and to 700 hourly employees at Mosaic's Esterhazy mine in southeastern Saskatchewan on Friday.

The layoffs, which affect about 80% of the total workforce at the two mines, will take effect March 8 at Colonsay and Feb. 15 at Esterhazy. Mosaic employs about 1,500 people in Saskatchewan, including about 250 at its potash mine at Belle Plaine, west of Regina.

The layoffs are for an indefinite period at Colonsay and for a renewable two-week period at Esterhazy due to differences in the collective agreements at the two mines.

Hourly workers at the Colonsay mine are represented by the United Steelworkers of America (USWA), while the hourly employees at Esterhazy are represented by the Communications, Energy and Paperworkers Union of Canada (CEP).

About 170 salaried employees at Esterhazy and 80 salaried employees at Colonsay will not be affected by the layoff notices.

Last week, Plymouth, Minn.-based Mosaic announced it would be reducing its potash production by up to one million tonnes in 2009 despite a tripling of potash operating profits in the second quarter to $574.9 million US due to higher selling prices.

"Toward the end of the quarter, however, worldwide crop nutrient sales activity dropped sharply, and it is expected to remain weak through at least the third quarter," said Mosaic CEO Jim Prokopanko in a press release.

"Because of these conditions, we are reducing our production to manage excess inventories, reducing capital expenditures, and working to maintain financial strength and flexibility."

Norm Beug, vice-president of potash operations for Mosaic, said softening market conditions in the fertilizer business are forcing companies, like Mosaic, into making production cuts and layoffs.

"The marketplace is sort of frozen up because of the credit crisis. Grain prices aren't high enough for the farmers to get moving, so everybody's sitting tight and waiting."

Mr. Beug stressed the layoff notices could be rescinded if market conditions change dramatically in the next four to eight weeks.

"These are potential layoffs. There's always hope that markets will move quicker. But China hasn't moved yet, nor has India," Mr. Beug said, referring to two major customers for Saskatchewan potash buyers.

"The (supply) pipeline looks to be full for the time being. We'll see how spring develops."

Source : Financial Post
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