FocusWages at core of PotashCorp dispute

08 August 2008 19:22  [Source: ICIS news]

By David Rosen

HOUSTON (ICIS news)--PotashCorp miners angry over wages in the wake of soaring fertilizer prices could not be swayed from staging a strike after mediation efforts broke down, sources close to the situation said on Friday.

The disagreement over wages proved to be the breaking point, according to Lee Edwards, a negotiator with the United Steelworkers union. She said the union offered to lower its wage demands, but management would not budge.

Hopes had surfaced earlier in the week that mediator and Ontario bureaucrat Vic Pathe could broker an end to the dispute which has set the North American potash market on a razor’s edge, given strong demand and tight supply.

Those hopes ended when some 500 workers at the company’s 2m tonne/year plant in Allan, an 800,000 tonne/year facility in Cory, and the 300,000 tonne/year plant in Patience Lake began picketing the sites and refusing to work.

The Cory facility is where workers staged a brief eight-hour strike in July.

PotashCorp produced about 9.1m-9.2m tonnes of potash in 2007, according to company spokesperson Tom Pasztor.

The labour action at Patience Lake has not initially affected supplies, since the facility is scheduled to begin its winter operations on 4 October, Pasztor said.

The Allan plant had already been down since 27 July for scheduled maintenance. The plant was scheduled to come online on Saturday, Pasztor said.

However, if negotiations do not resume, the strike could postpone Allan's return to normal operations.

PotashCorp did not provide details on how production was affected at Cory.

“We’re still determining what we can do with respect to getting back to any level of operation [at Cory]. We’re still looking at what the situation is. We have outstanding employees and it’s tough to operate without them,” Pasztor said.

Analysts commented that even a minor disruption in potash production could drive prices upwards on the global market, where demand outstrips supply.

Shares of PotashCorp tumbled $7.06, or 3.96%, on the New York Stock Exchange (NYSE) to trade at $171.33 at 11:15am CST (4:15pm GMT).

Officials on both sides of the dispute have met more than 40 times since April in an attempt to defuse a strike brewing at the same time that the company was enjoying record profits due to high global demand and buoyant prices.

PotashCorp tendered a 7% wage increase for this year, followed by 5.5% increases in 2009 and 2010. Labour leaders, however, had demanded to see the minimum wage for certified miners raised from (C$) 31/hour ($30/hour, €19.5/hour) to C$41/hour, representing an increase by some 32%.

PotashCorp’s profits have soared along with potash prices, currently assessed at $650-945/tonne, according to data from global chemical market intelligence service ICIS pricing.

“These men are not happy with the fact that at record breaking profits, this employer does not want to share the wealth,” Edwards said.

Pasztor demurred on whether PotashCorp would be prepared to sweeten its offer to union leaders, nor did he confirm whether or not CEO Bill Doyle personally would get involved in the bargaining process.

With the strike underway labour talks are paralyzed, and there are no scheduled meetings through Sunday.

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By: David Rosen
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