PotashCorp To Suspend New Brunswick Operations, Expects Up To 430 Job Cuts

(RTTNews) - Potash Corporation of Saskatchewan Inc. (POT, POT.TO) Tuesday announced that it will indefinitely suspend its Picadilly, New Brunswick potash operations. Further, the company plans job cuts of around 420-430 people in New Brunswick. The major crop nutrient company said it plans to retain around 35 employees at Picadilly to keep the operation in care-and-maintenance mode.

PotashCorp President and Chief Executive Officer Jochen Tilk said, "This is a very difficult day for our employees and our company,... while these are important steps in running a sustainable business and positioning the company to best meet the needs of its many stakeholders over the long term, such decisions are never easy."

To reduce the impact to jobs, the company will have more than 100 open positions for New Brunswick employees to join its Saskatchewan operations, along with relocation assistance.

PotashCorp will establish a C$5 million community investment fund to help employees and local residents.

Through the optimization of production, PotashCorp expects to increase its competitiveness and reduce cost of goods sold by $40-$50 million in 2016, although this will be partially offset by severance and transition costs.

The Picadilly mine will be placed in care-and-maintenance mode at an estimated annual cost of $20 million in 2016 and $15 million in subsequent years. Should the company decide to resume operations at Picadilly, it would require a period of about one year.

Severance and transition costs for the suspension of potash operations are expected to approximate $35 million and will be reflected in first quarter 2016 earnings.