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Billion-dollar potash biz looking to Northern Ontario suppliers

Affectionately known as “pink gold,” potash may prove to be the next mineral to power economic growth amongst Sudbury service and supply firms.
PotashCorp
Northern Ontario companies stand to cash in on billons being spent in Saskatchewan on potash (above) and uranium mining over the next decade.

Affectionately known as “pink gold,” potash may prove to be the next mineral to power economic growth amongst Sudbury service and supply firms.

While the mineral may not be mined within Ontario, its place at the heart of the rapidly-expanding Potash Corporation of Saskatechewan’s (PotashCorp) activities in its home province and New Brunswick is leading company officials to look Canada-wide for $6.4 billion worth of materials, equipment and services in the coming years.

In recent weeks, the company’s eyes have fallen on Sudbury, particularly during a late summer meeting with the Sudbury Area Mining Supply and Service Association (SAMSSA).

“The potential for Sudbury companies is huge,” says Ralph Sanders, PotashCorp’s manager of corporate procurement.

“You have a lot of suppliers in the area that have the expertise that we’re looking for already. In Saskatoon, we’ve pretty well saturated our market, as we’ve pulled everyone we can. We’re looking for more, and that’s one of the reasons we’re here right now.”

Sanders wasn’t the only optimistic soul in the room, however, with several local firms sharing in his belief that regional businesses could have a part to play in the rampant growth of PotashCorp. Many hoped to follow in the footsteps of North Bay’s Cementation Canada, which is already involved in the Surrey, New Brunswick project.

“There’s definitely opportunities with PotashCorp, and there’s maybe some technologies here that can be transported to the potash markets, and so events like this really are the first step in building that foundation,” says Jean-Marc Valade, general manager of Carriere Industrial Supply Ltd.

Alicia Marcotte Woods, sales and marketing manager with Marcotte Mining Machinery Services Inc., also expressed some hopes for potential partnerships.

In fact, Marcotte Mining has already been in preliminary discussions with several of PotashCorp’s operations, even having visited the Lanigan and Cory sites in Saskatchewan.

Woods hopes to be able to supply underground light-duty utility vehicles to the mines, particularly as the company has already provided similar equipment to Agrium Inc., another potash miner.

With the populations of China and India growing at an unprecedented pace, the need for fertilizer is becoming stronger, creating explosive growth in the potash market. At a market capitalization of $60 billion-plus, Potash Corp. is the single most valuable company in the country, ahead of such prominent business figures as Research in Motion.

Although its operations involve soft-rock mining, their needs still cover a broad range of materials and services applicable to Northern Ontario, from mining, milling and mechanical equipment to crushers, centrifuges and safety materials. In all, its needs include “just about everything you can think of that you’d use in a typical mining operation,” says Sanders.

However, the company has a decentralized purchasing system, meaning each operation has its own purchasing department. As such, potential suppliers are encouraged to speak not only to Sanders but also to each plant, who in turn will determine if what’s being offered is a good fit.

Purchasing decisions involve more than competitive pricing, encompassing 17 other factors. These include the company’s safety record, technical expertise, proof of regulatory compliance, skill level, and reliability, among others.

Quality assurance in particular stands out as an ongoing concern, as many of the company’s current suppliers have eventually seen a decline in the quality of their offerings as time has gone on.

Should Northern Ontario and other distant centres become supply nodes for some of PotashCorp’s operations, the company may begin to consider conducting plant inspections to ensure that quality remains strong at the source.

Despite the distances that may be involved, Sanders remains confident that the opportunities for local companies are strong, an idea which echoed by the likes of Adam Tonnos, manager of sales and product development with Sudbury’s Bestech.

With partnerships in Mexico, South America, and throughout the United States, Bestech is looking to extend its reach into other regions of Canada, making the aggressive growth of PotashCorp a good fit.

“We’re really looking to leverage those opportunities for growth and diversification, which is really key to our business success in the long-term. We seem to be more easily heading south, but we’d like to make that trip out west as well,” says Tonnos with a smile.