PotashCorp mothballs Picadilly mine, leaves more than 420 jobless

PotashCorp Picadilly mine in Penobsquis, New Brunswick.

Potash Corp of Saskatchewan (TSX, NYSE:POT), the world's largest crop nutrient company by capacity, is "indefinitely" halting operations at its relatively new Picadilly mine, in Canada’s New Brunswick, in response to falling potash demand and weakening prices.

The company, which had more than 5,000 employees worldwide at the end of 2014, said the suspension, effective immediately, would lead to 420-430 job cuts.

However, a crew of roughly 35 employees will remain at Picadilly to keep the operation in "care-and-maintenance mode".

In addition, up to 100 workers will remain in place through a transition period of roughly four months, and the company will set up a $5 million fund to assist other employees with finding new jobs.

“This is a very difficult day for our employees and our company,” said PotashCorp President and Chief Executive Officer, Jochen Tilk, in a statement.

“While these are important steps in running a sustainable business and positioning the company to best meet the needs of its many stakeholders over the long term, such decisions are never easy,” Tilk added.

The $2.2 billion mine, which began operations in late 2014 — almost seven years after the firm first announced its expansion plans — was supposed to provide PotashCorp strategic access to the Latin American market.

The company said that its international customers, who depended on supply from the New Brunswick operation, would now be served from Saskatchewan through Canpotex.

The decision is expected to cut PotashCorp's capital costs by $50 million in 2016 and $135 million over the next two years.

More to come …

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