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The Government of Saskatchewan is hoping changes to potash regulations will help create new investment and innovation in the sector.
The province announced amendments to The Potash Production Tax Regulations, 2020, that are aimed at junior producers and research development.
New regulations offer incentive tax credits of 40 per cent of eligible expenditures for qualified research and development projects and “approved market development projects.”
Companies will be able to take advantage of these credits by removing expiry dates and enhancing eligibility requirements.
“These changes will promote the expansion of Saskatchewan’s potash sector and ensure that our province remains the preferred jurisdiction in which to pilot innovative technologies,” Energy and Resources Minister Bronwyn Eyre said in a government news release.
“As we move into economic recovery, we want to attract and foster new, sustainable advancements in our province’s world-class resource sector.”
Pam Schwann, president of the Saskatchewan Mining Association, said this is a much-needed effort to keep Saskatchewan’s standing as a leader in the potash sector.
“Now we’ve got mining machines underground that run themselves, or we’re seeing a lot of innovation around safety and proximity detection — that’s about people not being near machines so they can get out of harm’s way,” Schwann said.
“Now companies will be able to claim some of their research and development costs for longer than they had been earlier.”
Schwann said the announcement also raises more awareness around the 40 per cent credit as not all companies were “leveraging that as much as they could have been.”
The province said qualified projects must demonstrate improved production efficiency, mitigate environmental impacts and reduce physical risks.
Companies must create new markets or expand current ones to be eligible for market development credits.
“As we look to provide more food to the world on less available land, we’re going to need more potash production,” Schwann said. “So we should be looking to incent that from jurisdictions that are already world-leading performers.”
Schwann added the incentives are important to spur innovation as things like the federal carbon tax create extra costs for Canadian companies compared to other potash-rich countries like Russia and Belarus, where there are no such taxes.
“We need to keep pushing ourselves that little extra bit to make sure that we can produce cleaner potash for less money than other jurisdictions,” Schwann said.
The province’s potash sector accounts for nearly 30 per cent of world production. Potash sales in 2019 reached 12.3 million tonnes with sales expected to reach a record of nearly 14 million tonnes in 2020, according to the provincial news release.