SASKATOON, SK, Aug. 14 /CNW/ - United Steelworkers' (USW) Western Canada
Director Stephen Hunt said Thursday that investors should use their influence
to urge Potash Corporation of Saskatchewan (PCS) management to negotiate a
settlement with Steelworkers on strike at three mines near Saskatoon.
"PCS stock has fallen since the dispute began," said Hunt. "Agrium, the
other major potash company traded on the Toronto Stock Exchange, has increased
its share price during the same period. Shareholders need to understand that
PCS is responsible for this dispute and is in a position to resolve it."
USW members first picketed the Cory mine on July 28. On July 25, the last
day of trading before strike action began, PCS shares closed at $205.89.
Today, PCS shares closed at $190.26, down eight per cent.
By comparison, Agrium closed at $85.92 on July 25. Today, it closed at
$86.86, up one per cent.
"While all potash companies are usually affected by the same industry
trends, the discrepancy between PCS and Agrium suggests that the strike is
impacting PCS share prices," said USW economist Erin Weir.
The Allan, Cory and Patience Lake mines accounted for about 30 per cent
of the company's potash production. Potash, as opposed to phosphates and
nitrogen, accounted for just over 60 per cent of PCS profits. Therefore, the
closure of these three mines will eliminate nearly 20 per cent of total
In the second quarter of 2008, PCS reported an after-tax profit of
$905-million. This quarterly profit equals a weekly profit of $70-million.
These figures imply that each week of the strike is costing PCS approximately
$14-million in lost profits.
During all of 2007, the 450 USW members employed at Allan, Cory and
Patience Lake were paid wages of $32-million. In terms of lost profits, the
cost of proposed improvements to the collective agreement is far less than the
cost of continuing the strike.
"PCS management has drawn an arbitrary line in the sand," said Hunt. "PCS
shareholders would be better served if management made a reasonable offer to
get union members back to work."
"Some analysts have suggested that the strike will increase potash
prices, compensating PCS for the lost volume. However, a more realistic
assumption is that PCS was producing the profit-maximizing volume of potash
before the strike," said Erin Weir.
"In this case, the lost volume will outweigh any price increase.
Furthermore, PCS competitors will reap the full benefit of any price increase
without suffering a loss of volume."
For further information:
For further information: Erin Weir, (416) 544-6005, (416) 546-9581;
Stephen Hunt, (604) 683-1117, (604) 816-2554