Agrium restarts Vanscoy potash mine after mechanical failure, expansion

CALGARY – Agrium Inc. (TSX:AGU) has restarted potash production at its Vanscoy mine southwest of Saskatoon.

Production at Vanscoy was suspended in July after a mechanical failure on the operation’s main hoist system.

Agrium had planned to replace the equipment as part of an ongoing expansion and decided to delay a restart until it completed the tie-in of new capacity.

The Calgary-based fertilizer producer said Wednesday it’s maintaining a target of producing 2.1 million tonnes of potash at Vanscoy in 2015, with activity ramping up over the first half of the year.

The expansion is expected to increase annual output at Vanscoy by about one million tonnes over a three-year period between 2015 and 2017.

Agrium executives said in November the project would cost US$2.3 billion, about 53 per cent more than the original estimate three years ago when the expansion was announced.

The company estimated in December 2011 the expansion would cost about US$1,500 per tonne of additional capacity — or about US$1.5 billion and later increased that forecast in February 2014 to nearly US$1.9 billion.

Ron Wilkinson, president of Agrium’s wholesale business unit, has said the higher cost was due to a combination of factors including poor weather, contractor inefficiency and Ottawa’s changes to Canada’s temporary foreign workers program.