Saskatchewan to rely on potash, agriculture during low oil prices: premier

Saskatchewan Premier Brad Wall speaks to media at the official opening of a carbon capture and storage facility at the Boundary Dam Power Station in Estevan, Sask. on October 2, 2014. (Michael Bell / The Canadian Press)

REGINA -- Premier Brad Wall says potash and agriculture will support Saskatchewan's economy while oil prices are low.

He made the comments on Monday as Mosaic announced a $1.7-billion investment in its potash mine in Esterhazy in the province's southeast.

Wall said Saskatchewan will rely on a diversified economy during what he calls "uncertain times" in the energy sector.

"We'd like to see other sectors of the economy ... pick up some of the slack so to speak."

Wall said that investment in Saskatchewan's potash industry has totalled more than $17 billion since 2007. Mosaic previously invested $1.5 billion in the Esterhazy mine in 2009.

Saskatchewan is expecting a revenue shortfall of between $600 million and $800 million this year due to low oil prices that tumbled for a time into the US$40s a barrel, but have been hovering around US$50 in recent weeks.

"We need to continue to diversify," Wall said. "The potash industry has played a starring role in the growth story that is our provincial economy."

In January, a report from the University of Calgary criticized the province's potash royalty structure for being "alarmingly inefficient."

The report, from the university's School of Public Policy, said while Saskatchewan produces almost one-third of the world's potash, its tax on the resource isn't competitive on an international level.

Wall said he agrees the system is complex, but added "it's hard to argue with results."

The government would be prepared to sit down with stakeholders to review potash royalties, taking investment interests into account, he said

"There will never be surprises because (companies) are making billions of dollars of investment," he said. "We wouldn't want to jeopardize that."

The premier added that the province is well-positioned for long-term growth, because it can provide energy and food to the international community.

Wall has said the upcoming budget is the most difficult his Saskatchewan Party government has had to put together.