All posts by mickeybarb@charter.net

Industry Warns Eastern Canada Fertilizer Supply Threatened by Import Tariffs on Russia, Belarus

Belarus, Eastern Canada, Featured, Mono-Ammonium Phosphate, News, Nitrogen, Phosphate, Russia, UAN, Urea

A recent decision by the Canadian government to implement a 35 percent tariff on virtually all imported goods from Russia and Belarus that were not in transit prior to March 2, 2022, has raised red flags among farmers and member of the Canadian fertilizer industry, who said the tariff could severely restrict spring fertilizer supplies in Eastern Canada.

The tariffs are part of Canada’s decision earlier this month to withdraw the most-favored-nation status to Russia and Belarus as trading partners. Fertilizer industry participants told Green Markets that as much as 25 percent of phosphate fertilizers and 55 percent of nitrogen fertilizer used in Eastern Canada comes from Russia, mostly in the form of urea, UAN, and MAP.

“Right now, there are a lot of gray areas with the logistics of the Russian sanctions, and we are working with our government contacts to bring some clarity to them,” Fertilizer Canada told Green Markets. “While it’s having a negative overall effect to the whole industry, Eastern Canada will be disproportionately affected since they depend on Russian fertilizer imports. At this time, our members impacted by the sanctions are looking to source product to avoid issues of shipments being turned away or being subjected to the 35 percent tariffs.”

A letter drafted by the Ontario Agri-Business Association (OABA) is making the rounds among trade and farm groups in Eastern Canada. Addressed to members of parliament, the letter urges the Standing Committee on Agriculture and Agri-food (AGFI) to hold an emergency meeting to tackle the supply chain challenges that the Canadian fertilizer industry currently faces, and specifically the impact the tariff will have on spring fertilizer supplies.

“The agricultural sector is fully supportive of punitive actions against Russia resulting from their decision to invade Ukraine,” the letter states. “Although the tariff is intended to be a punitive action against the Russian economy, the consequences will ultimately be felt by Ontario farmers through spring fertilizer supply shortages and price increases.”

The letter notes that Canadian farmers and the fertilizer industry have adapted to a variety of recent challenges, including supply chain disruptions and product shortages related to COVID-19, a global shortage in shipping containers, and a general lack of available labor.

“We have faced these challenges head on and adapted quickly,” the letter states. “However, we find that the implementation of a 35 percent tariff on fertilizer imports from Russia on pre-existing orders and with minimal global sourcing alternatives at this late stage prior to spring will severely impact already tight fertilizer supplies and escalated farm level fertilizer prices.”

While expressing support for a tariff on Russian fertilizer imports that were ordered on or after March 3, the letter urges lawmakers to withdraw the tariff on fertilizer imports from Russia and Belarus that have a documented fertilizer purchase order made prior to March 2, 2022.

“Purchase orders for Russian fertilizer are typically made by Canadian based companies who import fertilizer into Eastern Canada several months in advance of shipments being initiated,” the letter states. “As a sector, our position is that fertilizer importers should not be penalized for business decisions made prior to the implementation of the tariff.”

The letter further urges that any tariff payments made by fertilizer importers be put “in-trust” until the federal government clarifies its tariff policy. This would allow Canadian companies importing fertilizer into Eastern Canada to recoup tariff payments if amendments are made to the current policy to “mitigate the undue burden placed on the domestic fertilizer supply chain,” the letter states.

In addition, the letter asks that any vessel shipments of fertilizer of Russian or Belarus origin that are currently in transit be allowed to offload at the Port of Hamilton and the Port of Montreal if all other necessary shipping requirements are followed.

“It is vital to Ontario farmers that vessels currently enroute to Canada from the Black Sea/Baltic region are permitted to deliver the fertilizer that Ontario farmers vitally need during the spring planting season,” the letter states. “If this is not allowed to happen, there is the very real probability that some Ontario farmers will not be able to access adequate fertilizer to grow their crops.”

Finally, the letter asks the Canadian government to consider providing compensation to fertilizer importers, distributors, ag retailers, and farmers for the “undue financial hardships” associated with the implementation of the 35 percent tariff on fertilizer.

“The timing of the tariff decision and implementation significantly impacted long established supply chain operations and agreements that had already been negotiated and logistics established,” the letter states. “The tariff negatively impacts product availability with no feasible global sourcing alternatives weeks before the crucial spring planting period. The tariff further escalates farm level pricing due to tariff fees being incorporated into mid-spring fertilizer imports.”

Based on existing warehouse capacity in Eastern Canada, one industry participant speculated that Ontario can store roughly 40-50 percent of its spring fertilizer needs ahead of demand. The balance, he said, is dependent on in-season rail for potash tons from Western Canada, and import vessels for a majority of the urea and UAN, as well as approximately 40 percent of the region’s spring phosphate needs. The urea and UAN imports are most often from Russia, with phosphate imports split evenly between Russia, Morocco, and the U.S.

“Typically we like to think we can get going in spring with the product on hand, but when the planting season is underway we are dependent on the vessels,” he told Green Markets.

OCP Targets 2022 Production Hike, Eyes Alternatives to Russian Ammonia

Ammonia, Mono-Ammonium Phosphate, Morocco, News, News Briefs, Russia, Triple Superphosphate

Morocco’s OCP Group SA aims to raise fertilizer output by more than 10 percent in 2022 to meet higher demand despite the loss of Russian ammonia from its supply chain, according to a Reuters report, citing a senior company official.

The state-owned phosphates major is targeting to increase production to 11.9 million mt this year, up from 10.8 million mt in 2021. It then plans to add another 3 million mt of annual output capacity in 2023, according to the report, citing OCP Executive Vice President, Performance Management Nada Elmajdoub.

OCP is expected to focus on production of MAP, TSP, and NP production, because these products need less ammonia to producer than does DAP. OCP sees demand for its products coming from India, the Americas, and Africa, the report cited Elmajdoub as saying.

Morocco imported some 1.65 million mt of ammonia last year, according to Morocco’s Office des Changes 2021 data. The country imported 826,255 mt from Russia in 2021, according to Trade Data Monitor, or around half its ammonia requirements.

Elmajdoub was quoted by Reuters as saying that on ammonia sourcing in particular, OCP had been working on building alternative supply “thanks to our strong network of suppliers globally.”

Longer term, the senior executive said OCP aims to start importing ammonia from U.S producers next year under a long-term supply deal, and it also expects to start ammonia production at a joint venture plant in Nigeria in 2025 (GM March 5, 2021).

OCP Group early this month inked an agreement with the U.S.’s Koch Ag & Energy Solution LLC, under which a Koch affiliate will acquire a 50 percent interest in Jorf Lasfar Fertilizers Co. III (JCF III) from OCP (GM March 4, p. 1).

As part of their agreement, the companies intend to collaborate on the supply of ammonia and sulfur to OCP, and leverage their logistical capabilities for the shipment of fertilizers from Morocco.

While never confirmed, major industry players believe that OCP has a sizeable offtake agreement with Gulf Coast Ammonia LLC (GM Jan. 10, 2020), whose new 1.3 million mt/y ammonia plant is due up in first-half 2023.

Australia’s Minister Requests Perdaman Urea Project Halt While Concerns Assessed

Australia, News, News Briefs, Urea

The department for Australia’s Federal Environment Minister, Sussan Ley, on March 11 issued a request to Perdaman Industries to cease work on a proposed A$4.5 billion urea plant on the Burrup Peninsula in Western Australia’s Pilbara Region while the Department considers concerns from Traditional Owners about damage to the UNESCO short-listed rock art and other culturally sensitive sites.

The request is not legally binding, and Perdaman Industries has yet to comment on the request.

The Burrup Peninsula, which is known as Murujuga by Indigenous Australians, contains what is widely considered to be the world’s oldest and largest ancient rock art collection.

The rock art has been found to be highly sensitive to the emissions produced from heavy industry, and scientific studies already have established an ongoing pattern of degradation on the surface of the art.

Western Australia’s Environmental Protection Authority (EPA) recommended Perdaman’s ammonia and urea project, located about 20 km northwest of Karratha, for environmental approval last September, subject to certain conditions, including air quality (GM Sept. 10, 2021).

EPA Chair Professor Matthew Tonts at the time said EPA’s conditions reflected the authority’s commitment to ensuring the protection of the Murujuga Peninsula’s unique environmental values, including the nearby rock art.

Tonts said the project proponent will need to demonstrate that the project has no adverse impact that accelerates the weathering of the rock art.

The Perdaman facility proposes to produce 2.14 million mt/y of granular urea, and is targeting first production in the fourth quarter of 2025 (GM May 7, p. 1).

The Northern Australia Infrastructure Facility (NAIF) in February this year announced its intention to invest A$255 million (approximately US$183 million at current exchange rates) in infrastructure supporting the Perdaman proposed urea project (GM Feb. 11, p. 34).

The investment will be used for upgrades to common-user infrastructure that will support the urea project.

Perdaman Industries’ subsidiary, Perdaman Chemicals and Fertilisers Pty Ltd., the developer the project, signed a 20-year offtake deal with Incitec Fertilizers Pty Ltd., a wholly-owned subsidiary of Incitec Pivot Ltd. (IPL), in May 2021 for up to 2.3 million mt/y of granular urea from the proposed plant.

Uralkali Considers Temporary Suspensions; New Leadership Named

Belarus, News, News Briefs, Potash, Russia

Uralkali PJSC said on March 17 that it was considering the temporary suspension of some of its employees as it assessed the economic situation in its markets. However, on March 18, Bloomberg reported that Uralkali had decided to postpone any decision on the temporary suspension and would inform on how the situation develops in due course.

Initial reports were that the suspension would be temporary, and staff would get two-thirds of their salary. However, Uralkali did not elaborate on how many of its workers likely would be suspended or how much of its production might be reduced if the employee suspension is implemented.

The potential move by the Russian potash producer, which controls some 20 percent of global potash output, has ratcheted up global potash supply anxieties, which already are running high due to neighboring Belarus being effectively out of the market because of European Union and U.S. sanctions unrelated to the war in Ukraine.

Belarus potash marketer and exporter JSC Belarusian Potash Co. (BPC) was forced to declare force majeure last month after Belarus potash producer Belaruskali could not find alternatives to railing potash to the Lithuanian port of Klaipėda (GM Feb. 18, p. 1). Belarus potash typically accounts for around 15 percent of global potash exports.

Uralkali CEO Vitaly Lauk, commenting on the company’s IFRS FY2021 financial results in a March 4 statement, said at that time the company continues its normal operation, but it was “closely monitoring the current geopolitical situation” (GM March 11, p. 27).

The potash company produced 12.3 million mt of potash last year (GM March 11, p. 34). Sales volumes in 2021 were lower year-over-year, slipping by nearly 6 percent to 12.0 million mt, and export sales volumes were down almost 10 percent, at 9.1 million mt. But sales volumes to the domestic market increased by 11 percent, to 2.9 million mt

“While Uralkali is not under any sanctions, Russia can’t supply farmers in Europe and elsewhere with contracted volumes of fertilizers because a number of foreign logistics companies are sabotaging deliveries,” Russia’s Industry and Trade Ministry said earlier this month, as cited by Bloomberg.

The Industry and Trade Minister on March 10 announced that Russia was to temporarily suspend exports of fertilizers, although the specific products involved and the list of countries to be affected are yet to be identified and listed by the government (GM March 11, p. 1).

Uralkali was controlled by Russian billionaire Dmitry Mazepin via Uralchem JSC, but after coming under European Union (E.U.) sanctions last week due to Russia’s invasion of Ukraine, he has transferred control of the Uralchem group to two of his long-time associates – Dmitry Tatyanin, the company’s new Chairman of the Board of Directors, and new CEO Dmitry Konyaev, according to an Interfax report on March 15.

According to the report, citing the Unified State Register of Legal Entities, Tatyanin, who has been the Legal Director of Uralchem since 2007, now owns 48 percent of Uralchem Fundamental Chemical Co. LLC, and owns JSC Uralchem UCC, a wholly-owned subsidiary of Uralchem Fundamental Chemical Co. LLC.

Konyaev, who became JSC Uralchem UCC CEO after Mazepin resigned the position on March 9, secured a 4 percent interest in Uralchem Fundamental Chemical Co. LLC.

The changes took place on March 14.

Uralchem Fundamental Chemical Co. LLC announced late on March 10 that Mazepin, who previously held a 100 percent stake in the company, had sold a 52 percent controlling stake from his holding, reducing his stake to 48 percent stake.

Konyaev previously chaired the Board of Directors of Uralchem JSC, and Tatyanin was its deputy chairman of the board.

U.K. Imports of Russian Potash & Phosphates to Face Additional Tariffs

Belarus, News, News Briefs, Phosphate, Potash, Russia, United Kingdom

The U.K. government on March 15 announced fresh sanctions against Russia following its invasion of Ukraine on Feb. 24. Among the new measures, Russian imports of potash and phosphates will face an additional tariff increase of 35 percentage points over and above any existing tariff rate, as the U.K. withdraws Russia’s access to most-favored-nation tariffs.

As far as the U.K’s phosphates imports are concerned, DAP supplies will be the most impacted. Russia was the source for 38 percent of the country’s DAP imports last year. The U.K. imported 127,323 mt of DAP in 2021, according to Trade Data Monitor.

Regarding imports of Russian potash, the U.K. imports relatively little potash from Russia. In 2021, the country imported 5,801 mt of potash from Russia, according to Trade Data Monitor. Total potash imports into the U.K. last year were 357,484 mt, down 16.5 percent from 428,225 mt in 2020.

Phosphates and potash are among a raft of Russian import products selected to be subject to the additional tariff increase. According to a U.K. government statement, the products have been selected “to inflict maximum damage on the Russian economy while minimising the impact on the U.K.”

The U.K. government said it will deny Russia – as well as Belarus – access to most-favored-nation tariffs for hundreds of their exports, depriving both countries key benefits of WTO membership.

Russian vodka is one of the iconic products affected by the tariff increases. Other Russian products on what the U.K. government described as “the initial list of import goods worth £900 million” (approximately $1.2 billion at current exchange rates) that will now face the additional 35 percent tariff, on top of the current tariff, are iron and iron ore, steel, wood, tires, cement, copper, aluminum, silver, lead, cereals, oil seeds, ships, white fish, and fur skins and artificial fur, among a raft of others.

Alongside its G7 allies, the U.K. government on March 15 also announced a ban on exports to Russia of high-end luxury goods, and said further details on the export ban will follow in due course. Earlier U.K. sanctions-related export bans to Russia have included items such as high-end fashion, works of art, and luxury vehicles.

The U.K. already has banned Russian ships from its ports. U.K. Transport Secretary Grant Shapps on March 1 instructed all U.K. ports as of that day to deny access “to any vessel that is flagged, registered, owned, or operated by – or connected to – Russia.” (GM March 4, p. 28).

EuroChem’s Melnichenko Warns of Food Crisis, Calls for War’s End; CEO Resigns, New One Named

Europe, News, News Briefs, Russia

Former CEO and controlling shareholder of EuroChem Russian billionaire Andrey Melnichenko this week warned that the Russia-Ukraine conflict will lead to a world food crisis and called for the war to end, according to a Reuters report, citing comments sent to the news agency by his spokesperson.

“Agriculture and food will be one of the casualties of this crisis,” Melnichenko said, adding that the war “has already led to a spike in fertilizer prices that are no longer affordable for farmers.”

He warned that food supply chains were already impacted by the COVID-19 pandemic, and events now “will lead to even higher food inflation in Europe and likely food shortages in the world’s poorest countries.”

Melnichenko on March 9 resigned from the EuroChem Board and withdrew as a main beneficiary of the group following his inclusion on the European Union’s (E.U.) expanded list of sanctioned Russian individuals, announced March 9 (GM March 11, p. 1). He also resigned from the Board and as a main beneficiary of Russia’s largest coal company SUEZ, a company he founded.

Italian authorities have reportedly seized a $580 million yacht owned by Melnichenko in the northern Italian port of Trieste.

On March 16, EuroChem Group AG, Zug, Switzerland, announced that Vladimir Rashevskiy has resigned as CEO and from the Board of Directors, effective March 15, 2022.

Rashevskiy and 14 other prominent business figures from Russia were included in another wave of sanctions the E.U. announced against Russia on March 15.

“While the move lacks any conceivable justification, Mr. Rashevskiy has stepped down in order to ensure the smooth running of the business and to help EuroChem continue underpinning global food security for millions of people worldwide,” the group said in a statement.

EuroChem appointed Sergei Tverdokhleb as the new CEO of EuroChem MCC, according to an Interfax report, citing a company statement on March 18. He also has been appointed to EuroChem MCC’s Board of Directors. He was previously Deputy for Special Projects and External Relations.

Nutrien to Boost Potash Production

News, News Briefs, Potash, Saskatchewan

Nutrien Ltd., Saskatoon, said March 16 that in response to the uncertainty of potash supply from Eastern Europe it plans to increase potash production capability to approximately 15 million mt in 2022, an increase of nearly 1 million mt compared to previous expectations. The majority of additional volume is expected to be produced in the second half.

“Our thoughts and sympathies are with those impacted by the crisis in Ukraine, and we hope for an immediate de-escalation of this conflict,” said Ken Seitz, Nutrien’s Interim President and CEO. “The impacts of this conflict extend beyond Eastern Europe, as a disruption in supply of key agriculture, fertilizer, and energy commodities could have implications for global food security.

“Nutrien is responding to this period of unprecedented market uncertainty by safely expanding potash production to help provide our customers with the crop inputs they need,” he added. “We continue to closely monitor market conditions and will evolve our long-term plans to ensure we utilize our assets in a safe and sustainable manner that benefits all our stakeholders.”

Last month, Nutrien gave a 13.7-14.3 million mt production estimate; however, at the time, it said production could be boosted another 500,000 mt if demand warranted (GM Feb. 18, p. 1). Nutrien reported potash capacity of over 20 million mt/y, with another 5 million mt available via lower cost brownfield expansion.

Nutrien said its 2022 potash production is expected to increase by nearly 20 percent compared to 2020 and account for more than 70 percent of global production added over this period. “We expect a small increase in our 2022 capital expenditures and will be hiring additional employees across our network of low-cost potash mines in Saskatchewan,” the company said.

The extra tons from Nutrien may not be nearly enough to meet demand. Sanctions on major producers means there could be a shortage. Second-ranked producer Russia may face sanctions due to its invasion of Ukraine, while third-ranked Belarus has already been cut off from global markets. That leaves Canada scrambling to supply agriculture powerhouses like Brazil, the biggest importer. The northern nation already supplies nearly all of the potash used in the U.S.

“Nutrien’s move to add 1 million mt of capacity, while sorely needed by the market, does not come close to fixing the supply gap if both Russia and Belarus are sanctioned out of the global potash trade,” said Alexis Maxwell, Green Markets Director of Research.

Russia and Belarus together supply about 42 percent of the $35 billion global potash trade, or some 24 mt annually, Maxwell said.

Two other large potash buyers, China and India, stepped up last month to lock in 2022 imports from Canada at $590/mt CFR (GM Feb. 18, p. 14).

EuroChem, More European Nitrogen Producers Follow Yara Offline

Ammonia, Croatia, Europe, France, Lithuania, News, News Briefs, Nitrogen, Poland, Urea

EuroChem Group AG, Zug, Switzerland, was one of the latest fertilizer producers in Europe this week to have made production curtailments amid record high natural gas prices in the region. It temporarily reduced fertilizer output at two of its plants in Belgium and Lithuania, according to Bloomberg on March 15, citing a statement from the company.

EuroChem said “it is working with the relevant authorities and partners in order to fully resume operations at these facilities,” but provided few other details.

BASF late last week was reported to be suspending ammonium sulfate deliveries to EuroChem’s Antwerp plant due to EuroChem’s owner coming under European Union sanctions, according to World News Report. However, this could not be confirmed with either party by Green Markets atpress time

Production curtailment announcements have also come over the past week from Lithuania’s nitrogen fertilizer and chemicals producer AB Achema, Croatian fertilizer producer Petrokemija d.d, and Polish producer Grupa Azoty.

Achema Extends Ammonia One Shutdown

Lithuania’s nitrogen fertilizer and chemicals producer Achema is reported to have decided to extend the shutdown of its ammonia 1 plant until at least August due to high natural gas prices. Production at the ammonia 1 plant, one of two ammonia plants operated by the company, remained shut after annual repairs were completed last July (GM Feb. 11, p. 34). In October, Achema cut production due to high natural gas prices.

Petrokemija Halts Production Again

Croatian producer Petrokemija d.d said on March 11 it has taken down temporarily its ammonia and urea production facilities for planned maintenance and to cut costs amid rising natural gas prices.

The producer said the price of gas reached €251 per megawatt hour (MWh) on March 7 from €118/MWh on March 1, “with strong volatility, which required a fast reaction to prevent uncontrolled losses at a time of lower market demand for fertilizers due to surging prices,” according to a SeeNews report, citing a company statement.

Petrokemija said it had postponed the planned maintenance work due to a lack of spare parts, due to the longer periods needed for them to be provided from Asia.

The company had only restarted production at its ammonia and urea plants on Jan. 21, after temporarily halting production on Dec. 3 due to a technical failure (GM Jan. 21, p. 28; Dec. 3, 2021).

It said it is maintaining normal production of other fertilizers, and before it halted ammonia and urea production on March 11, was able to produce sufficient volumes to meet the current demand of local farmers, according to the report.

Major Polish Fertilizer Plant Offline

The subsidiary of Polish fertilizer and chemicals company Grupa Azoty SA, Grupa Azoty Zakłady Chemiczne Police SA, on March 9 reported technical issues at the power plant at its Police production site involving the failure of two OP 230 boilers.

Zakłady Chemiczne Police said as a consequence, it had become impossible to generate the process steam necessary for the production of the Police’s most important units, resulting in “a temporary stoppage or a very significant limitation of production,” and as a result, has declared a force majeure event.

Police is Poland’s largest manufacturer of compound fertilizers, with some 1 million mt/y of production capacity. It also produces urea, among other products.

Zakłady Chemiczne Police in its March 9 statement said based on current available information, the company is unable to specify “a firm deadline” for resolving the technical problems and bringing production back up to its previous levels.

However, Grupa Azoty SA said it expects no shortages of fertilizer supply on the domestic market despite the “very demanding” situation on commodity markets and the breakdown of the power plant at the Police production site, according to a Polish Press Agency (PAP) report, citing a company statement.

Production of fertilizers continues despite “very demanding” conditions on the commodity markets, especially the “drastic” growth of gas prices, Azoty said.

Back in the late summer/autumn of last year, while Azoty decided not to limit the production of fertilizers, it did decide to limit its fertilizer exports with the exception of long-term contracts, and make supplying the domestic market a priority (GM Oct. 29, 2021; Oct. 15, 2021).

New Outages Follow Yara, Borealis, Nitrogénművek Zrt

All of these outages follow Yara International ASA’s announcement on March 9 that it was temporarily curtailing production at its Ferrara, Italy, and Le Havre, France plants (which produce both ammonia and urea) as a consequence of record-high natural gas prices in Europe (GM March 11 p. 1).

The company said including optimization and maintenance at other production facilities, it expected to be operating at approximately 45 percent of capacity by the end of last week.

Vienna-based Borealis AG, another European producer, also said on March 9 that it was running its ammonia production at a reduced rate due to high natural gas prices in Europe, and was considering halting output “for economic reasons.” Hungarian producer Nitrogénművek Zrt also said last week it was temporarily halting output of ammonia, citing high natural gas prices.

Canadian Pacific Issues 72-Hour Lockout Notice; Industry, Lawmakers Urge Federal Action

Canada, Featured, News

Canadian Pacific (CP) Railway Ltd. late on March 16 issued 72-hour notice to the Teamsters Canada Rail Conference (TCRC) of its plan to lock out employees at 00:01 ET on March 20, 2022, if the union leadership and the company are unable to come to a negotiated settlement or agree to binding arbitration.

TCRC represents more than 3,000 union members who work as engineers, conductors, and train and yard employees for CP. TCRC served a notice of dispute to the federal labor minister in February, citing issues related to wages, benefits, and pensions (GM Feb. 25, p. 1). Some 96.7 percent of TCRC members then voted in favor of a strike action (GM March 4, p. 1).

“For the sake of our employees, our customers, the supply chain we serve, and the Canadian economy that is trying to recover from multiple disruptions, we simply cannot prolong for weeks or months the uncertainty associated with a potential labor disruption,” said Keith Creel, CP President and CEO. “The world has never needed Canada’s resources and an efficient transportation system to deliver them more than it does today. Delaying resolution would only make things worse. We take this action with a view to bringing this uncertainty to an end.”

CP said it tabled an offer on March 15 that addressed a total of 26 outstanding issues between the parties, including an offer to resolve the TCRC’s key issues of wages, benefits, and pensions through final and binding arbitration. The TCRC leadership rejected CP’s offer on March 16.

“It was well known that CP was going to force a work stoppage and lockout our members. They have done just that,” said TCRC Spokesperson Dave Fulton in a March 16 statement. “At the bargaining table, CP continues to dismiss our members’ demands and are unwilling to negotiate the issues they have created. We remain committed to reaching an acceptable agreement that addresses our members’ issues. Our members are fully engaged and will be ready in the event CP carries out the notice.”

CP and TCRC leadership have been meeting daily with federal mediators, but CP said the two parties remain far apart. The railroad said it has commenced its work stoppage contingency plan and will “work closely with customers to achieve a smooth, efficient and safe wind-down” of CP’s Canadian operations.

“We are deeply disappointed that we find ourselves in this position,” said Creel. “CP will continue to bargain in good faith with the TCRC leadership to achieve a negotiated settlement or enter binding arbitration. The Canadian economy could avoid all the pain and damage of a work stoppage if the TCRC would agree to binding arbitration, an outcome we continue to push for.”

In response to the lockout notice, Minister of Labor Seamus O’Regan Jr. issued a statement on March 16 urging both parties “to consider making the compromises necessary to reach a deal that is fair for workers and the employer.” O’Regan said he and the Minister of Transport Omar Alghabra continue to monitor the situation closely.

“Our government respects and has faith in the collective bargaining process, because we know that the best deals are the ones reached by the parties at the bargaining table,” O’Regan said. “Canadians have worked together throughout the pandemic to find solutions to our collective challenges. They expect the same from such actors in our national economy.”

Fertilizer Canada on March 17 called on CP and TCRC to commit to binding arbitration, and asked the federal government to “be prepared to enact legislation to swiftly put an end to the work stoppage,” if necessary.

“A work stoppage compromises Canada’s position as a leading global fertilizer supplier and could result in fertilizer production facilities being forced to shut-in production, impacting Canadian workers, the economy, and food security,” Fertilizer Canada said. “Our members, which include manufacturers of essential nitrogen and potash fertilizers, are already beginning to feel the impacts as preparation for a work stoppage begins.”

Fertilizer Canada stressed that the fertilizer supply chain is already experiencing supply challenges compounded by the war in Ukraine. It added that there is no other alternative transportation method that currently has capacity or can be brought online in time to mitigate the impact of the work stoppage.

“While we respect the collective bargaining process, Canada cannot afford another disruption to our supply chain,” said Karen Proud, President and CEO of Fertilizer Canada. “With 75 percent of all fertilizer in Canada moved by rail, our members are critically dependent on rail service to move products across the country and into international markets.”

Speaking at the Saskatchewan Association of Rural Municipalities annual convention in Regina on March 16, Saskatchewan Premier Scott Moe called on the federal government to classify railworkers as essential and to ensure back-to-work legislation is passed if the strike proceeds.

“In no way does this undermine any of the negotiations that happen at any collective bargaining table,” Moe said. “This

[strike]

simply cannot happen. And I trust and I hope that the federal government is already considering some degree of what back-to-work legislation would look like should they need it, should there be a lockout or a strike in the days ahead.”

U.S. lawmakers also weighed in during the week. U.S. Sens. Kevin Cramer (R-N.D.), Steve Daines (R-Mont.), Mike Braun (R-Ind.), and John Hoeven (R-N.D.) on March 15 sent a letter to Canadian Prime Minister Justin Trudeau urging his cabinet to take action to prevent a strike, saying a work stoppage “would have significant market implications from agriculture to energy.” The letter noted that up to 15 percent of CP’s business is fertilizer shipping.

“We request you be proactive to avert any sort of disruption and prioritize the free-flow of goods and services between the U.S. and Canada,” the letter said. “However, if a labor dispute cannot be avoided, we urge the Canadian federal government and parliament to act swiftly to end the disruption quickly to avoid further harm to our respective economies.”

The senators’ letter follows an earlier appeal to President Joe Biden by The Fertilizer Institute (TFI), the Agricultural Retailers Association (ARA), and 19 other members of the Agricultural Transportation Working Group, who on March 7 requested that the administration work with the Canadian government to avert a major railway strike and to rescind the cross-border vaccine mandate for workers moving essential commerce (GM March 11, p. 1).