Saskatchewan is filling a resource gap caused by the war in Ukraine

Kelly Geraldine Malone, The Canadian Press

SASKATOON — Russia’s invasion of Ukraine has left world markets struggling with tighter supplies and higher prices than ever before, experts say.

Thanks to the natural resources in its soil and its stable and well-established agriculture, Saskatchewan found itself in a position to help fill the global supply gaps caused by the war.

« [Les Prairies] are big players in global markets for this sort of thing, says Ellen Goddard, an agricultural economist and professor emeritus at the University of Alberta. For the majority of Canadians, the real contribution of the Canadian Prairies to world markets is not very well understood”.

Saskatchewan, which has a population of less than 1.2 million, is best known for its many National Hockey League players, but it does not have a reputation as a big player internationally. However, the decisions taken in its boards of directors have a significant impact, especially as the war in Ukraine continues.

Several major companies in the mining resource sector are based in Saskatchewan. For example: Cameco Corporation, one of the world’s uranium giants, and Nutrien, the world’s largest potash and third nitrogen producer.

Both intend to seize the opportunity for growth offered by the war in Ukraine.

“With Russia’s actions in Ukraine, the West wants to solve its problem of dependence on this country for this source of energy. He wishes to obtain enriched, processed or raw uranium from Western sources. He wants to buy fuel made from western sources,” Cameco president Tim Gitzel said recently.

Earlier this year, potash exports from Russia and Belarus fell significantly due to sanctions and restrictions on financing activities. Shortly after, Nutrien announced plans to increase potash production to 18 million tonnes per year by 2025 to meet growing global demand, a 40% increase from 2020.

The fertilizer producer posted record profits in the first six months of the year — raking in US$5 billion — as farm input prices soared due to war and heightened fears over relation to global food security.

Nutrien’s interim chairman and CEO, Ken Seitz, told analysts in August that the company expected the effects of the war to drive demand for many years.

« We believe structural changes in the global energy, agriculture and fertilizer markets will provide a supportive environment for Nutrien well beyond 2022, » Seitz said.

David Soberman, a professor at the University of Toronto and holder of the Canadian National Chair in Strategic Marketing, points out that Saskatchewan suffered in the past when Eastern European countries recorded surpluses in the natural resource sector. For example, prices had stagnated for years after the breakup in 2013 of a Russian-Belarusian marketing cartel that increased potash competition in the market.

Saskatchewan businesses, however, remained stable throughout this period, says Soberman. This demonstrated to the global market that they are still reliable, especially in these uncertain times.

“The world needs the things the Prairies produce in many ways,” says Soberman. They are like a savior for the world”.

He acknowledges that the war in Ukraine is terrible, but that the uncertainty it brings can also make it more attractive to do business with Canadian companies.

Grain supplies and prices have also been disrupted following the halt in Ukrainian exports. Only one ship has left a Ukrainian port in August since the Russian invasion in February. Even if more grain were to be shipped from Odessa, the unpredictability of the war remained.

Russia and Ukraine were among the world’s leading producers and exporters of grain and cooking oil. In the years before the war, Canada’s share of the world market had declined due to increased exports from countries with access to the Black Sea, such as Russia and Ukraine.

The Canadian prairies can also act as a stable supplier of grains and oils, argues Joel Bruneau, chair of the economics department at the University of Saskatchewan.

Bruneau points out that Saskatchewan producers had to act ethically when responding to increased demand caused by the war. He adds that if companies started raising prices, it would not be forgotten anytime soon by partners around the world.

« We are a good supplier, » said Mr. Bruneau. So we make profits by being a good supplier.”