Building Canada’s Sustainable Resource Future with Foreign Direct Investment

What makes Canada, Regina, and Saskatchewan attractive for foreign direct investment?

Mosaic has almost a 60-year operating history in Saskatchewan, between Mosaic and its predecessor companies. About a decade ago, we started our multi-billion dollar expansion in Saskatchewan. The reason is that Saskatchewan is home to one of the best potash ore bodies in the world. Not only that, but we have a long history and a skilled labor pool to pull from, as well as fantastic technology. We have been building a mine of the future at our K3 facility in Esterhazy, using the best of automation and digitally transforming how we operate here in Canada.

Why did Mosaic invest in Canada and Saskatchewan and what advantages are you looking to leverage?

The entirety of our potash operation at the time of investment was in Canada, so it was our home base for our potash business. Again, it is resource rich, and to say that does not factor significantly into any foreign investment decisions is not realistic. When you pair the ore body with a relatively stable government and a workforce that is readily available, that equals an easy decision for companies like Mosaic to invest in Canada and in Saskatchewan.

Did any particular policies or incentives in Saskatchewan and Canada encourage Mosaic to invest?

At the time, we were getting expansion credit from the Government of Saskatchewan for the first few years of our expansion program here in the province that, unfortunately, was ended quite a few years ago. Now, it is really just about lowering our cost per tonne in order to become more globally competitive.

What are the competitive advantages of Saskatchewan’s agri-food and mining industries?

Frankly, right now, we have a lot of concerns around our competitiveness in our Canadian operations and a lot of that has to do with a drastically shifted tax regime from when we started our expansion program under a decade ago. Part of it is the layering of different environmental regulations between the province and the federal government. Some of the advantages are that we are extremely close. We are a mining company that is also linked with the agriculture industry very closely. One of our main markets is the North American Midwest in the United States, and so to be that close to a huge portion of our customer base, where over 50% of our product goes into, is a real positive. There is also a relatively stable transportation network in Canada. A lot of times we talk about delays, labor action, and blockades, but when you actually look worldwide, we do have a really great rail network. It definitely comes at a price—it is very expensive, especially when you look at the transportation costs of our competition around the world. However, we also know that it is relatively reliable and that is actually a competitive advantage, although most shippers do like to complain about our rail network in Canada to a great extent.

“The Canadian resource sector is the most sustainable in the world.”

The other competitive advantage, and the trends in five to 10 years are going to show this, is that the Canadian resource sector is the most sustainable in the world. We have cutting-edge technology when it comes to reducing greenhouse gas emissions, water usage, and all of these key buckets. Right now, because we are in the commodities sector, we are not getting a price differential from our customers, but in five to 10 years, customers worldwide are going to see the value in buying more sustainable products. We are hoping that eventually all of this extra attention and money that we are putting into our sustainability targets will actually start to pay us dividends.

Will Canada’s regulations around sustainable practices in resource industries be seen as an advantage in the future?

I think so, and we are even hearing that from the investment community. Five to 10 years ago, no shareholder was asking about our environmental, social, and governance strategy and what we were doing to better become stewards of our resources. Now, it is one of the main questions we get when we are talking to analysts. It is indicative of other things. If you have environmentally sustainable productions, you are becoming sustainable in a variety of other areas as well including cost and safety. You are minimizing risk or the possibility of an environmental impact to your bottom-line and so it is really important for us to keep focused.

“Five to 10 years ago, no shareholder was asking about our environmental, social, and governance strategy.”

Where the pain points are going to be for the Canadian resource sector is, in today’s market, we are not getting an extra bump in prices because we are producing our products sustainably. For the short- to medium-term, those are competitive disadvantages in terms of the extra money that we might spend in managing waste or incorporating new technology into our operations. In the potash industry, we are competing against mainly the Russians and the Belarusians who have a much lower cost of production and much less focus on environmental or labor standards than we do here in Canada.

What other global trends are impacting the mining and agri-food sectors and how will they affect the future?

The short-term trend that we are seeing with the pandemic is that people have a renewed, sharper focus on food security, especially when we were seeing grocery store shelves bare. In all of the jurisdictions where we operate, we managed to get essential business designation, and it put a finer point that we are part of the overall food supply chain and what we do is important. When there was so much chaos and uncertainty in the world, the one thing that was not going away was people’s need to have a sustainable food source. That that is really top of mind in a lot of the communities where we have customers and also where we operate. This is how important that food story is across the world.

“The short-term trend that we are seeing with the pandemic is that people have a renewed, sharper focus on food security.”

Some other global trends that we are seeing is that we see a lot of development in regions of the world where environmental sustainability is not top of mind. They are closer to some pretty key markets for us, so those regions have that advantage. They also have the short-term advantage of not having to focus on environment and regulations, as well as some unfair advantages when it comes to governance around their company such as who the owner is of the company and relationships internally with governments. When you look at all of that, for the resource sector in Canada and in North America, we are under more pressure to produce at a lower cost to be able to compete with those producers and developing countries. Right now, there might not be an awareness of how pressured the Canadian resource sector is when it comes to those challenges.

“We see a lot of development in regions of the world where environmental sustainability is not top of mind.”

The other thing that we are seeing as a global trend is companies’ involvement in the communities that they operate in. We have an Indigenous engagement strategy that we are quite proud of here at Mosaic. Worldwide, there is a bigger focus on how we work with Indigenous peoples. All of sudden it is not just a Canadian issue—we are seeing it in Brazil, Australia, and more, where there is a real focus on how we engage those local communities in a robust way.

Is diversity and inclusivity in the workforce an advantage that influences foreign direct investment?

It is an advantage. To have a more diverse workforce is a huge advantage and there is a great return both socially and for the business when you are engaging a more diverse workforce. What Canadians perhaps do not realize is that we are on the leading-edge of those conversations and figuring out how to engage all communities in the resource sector, not just certain ones. Because we are so forward thinking when it comes to that piece, there are going to be a lot of advantages for us later on down the road.

How available is talent in Canada’s resource industries and how do we further attract, train, and retain talent in the future?

Our biggest mining operation in Canada is at Esterhazy and because we have such a long history there, our hiring in that area traditionally has been pretty multigenerational. We have third and fourth-generation employees working at our Esterhazy site. Where we are challenged is to be inclusive in our hiring practices and that is something that we have been focused on tackling over the last few years. The second piece is that mid-level technical talent has always been a challenge for us to hire and retain just because Esterhazy is considered a more rural area. Those are the two buckets of our focus when it comes to talent. I would say in 2009 or 2010, when we were hiring 1,000 people in 18 months, we were really challenged to attract and retain employees. Now, because we have seen a slight down cycle in our markets as well as the impacts of COVID-19, it has been much easier to hire talent than it was three or four years ago.

What is the value of foreign direct investment in Canada for communities and the Canadian economy as a whole?

Using Mosaic as an example, we have spent $5 billion in the Province of Saskatchewan over the last decade and that has resulted in hundreds of jobs and guaranteed the future of our mining operations in Canada for the next 50 years. I understand where people’s concerns are with foreign investment, and there definitely has to be governance around the how and the why. However, when you look at the opportunities that it leads to for our citizens in these communities and the opportunities for career paths that are really innovative and unique for Canadian citizens, the good outweigh the bad.

“Climate change knows no boundaries and sometimes Canadians are almost ashamed of the resource sector instead of really embracing it.”

The Canadian resource sectors are one of the most sustainable and innovative in the world, so we really want to make sure those investment dollars are coming here so we can continue that. We are sending things to other countries that might not have our record of sustainability, and they are not going to be concerned about greenhouse gas emissions, water usage, or the impact by their extraction sector. Climate change knows no boundaries and sometimes Canadians are almost ashamed of the resource sector instead of really embracing it. It is really important that we realize that those investment dollars coming here is good for Canada but it is also good for the world that we continue to be a player in the world market when it comes to our resource sector.

What would you say to foreign investors considering investing in Canada’s mining and agri-food sectors?

The value of investing in Canada is that Canadians have a really long history of being a mining nation, especially in Western Canada. We have a great knowledge base with our employees, a relatively stable government structure in Canada, which not a lot of places have, and we have ease of access to lots of key markets. Although every jurisdiction has its challenges, Canada overall is a stable, safe, and clean environment to do business in.