Sask. ‘Well positioned’ to fill resource gaps created by war and sanctions on Russia: economists
Russia’s invasion of Ukraine has resulted in significant gains for Saskatchewan’s resource-based companies, according to industry experts.
Cameco Corp., a Saskatoon-based company, announced last week that it had inked a multi-billion dollar contract with SE NNEGC Energoatom – Ukraine’s state-owned nuclear energy utility – to meet all of Ukraine’s nuclear needs from 2024 to 2035 cover.
Cameco President and CEO Tim Gitzel says the Russian invasion of Ukraine has improved its prospects because the world needs to find other sources of uranium.
“This now allows us to ramp up our production here in Saskatchewan,” he said. “The future looks very, very bright for Cameco, for our people, and for Saskatchewan.”
In 2018, Canada, the world’s second largest supplier of uranium, produced 6,996 tons of uranium from mines in northern Saskatchewan, according to federal government statistics.
According to Gitzel, Cameco will supply uranium to nine nuclear reactors still under Ukrainian control and the remaining six in Zaporizhzhia when Ukraine regains control of the site.
He estimates that about two-thirds of Ukraine’s electricity comes from nuclear power.
“For us it was more than just a sale,” said Gitzel. “These are our friends over in Ukraine … and we wanted to show that we would stand shoulder to shoulder with them.”
Gitzel adds that Cameco is speaking to other countries that are turning their backs on Russian uranium.
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According to Samuel Gamtessa, an associate economics professor at the University of Regina, Saskatchewan is “well positioned” to take advantage of other emerging resource sector gaps. The province could be a big winner in the world market for potash and grains – Saskatchewan’s second and third largest exports, which account for 30 percent of the resources exported from the province.
Belarus and Russia accounted for about 35 percent of the world’s potash supply, Gamtessa says, but as sanctions take hold over the invasion, Saskatchewan has ramped up production.
The province already produces about 35 percent of the world’s supply, but Gamtessa says it could double its capacity by up to.
“Saskatchewan is ready and able to service…or replace these bottlenecks in the global marketplace,” he said.
Both Ukraine and Russia were major grain exporters, but with the invasion affecting Ukrainian production and sanctions affecting Russia’s, this has left a gap in the market.
That could include Saskatchewan’s wheat production, which accounted for 11 percent of exports in 2021.
Ellen Goddard, an agricultural economist at the University of Alberta, says it’s a sad reality that the economic outlook in Saskatchewan has improved because of the war in Ukraine and the earthquakes in Turkey and Syria.
“It’s complicated, but it looks like this demand will be there for quite a while in the future,” she said, noting that the floods in Pakistan also wiped out crops. “If the farmers can produce and the weather permits, there will be a pretty good demand for their production.”
Before the war, Goddard says, food demand surged because as COVID-19 restrictions eased, people started returning to restaurants.
She says most provinces were expected to run a deficit due to COVID-19 spending, but governments were running a surplus due to inflation and increased demand.
“Even beyond the traditional things that we exported, with some of these budget surpluses, provinces like Saskatchewan have laid the groundwork for us to play a major role in things like rare earths [elements],” She said.
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Goddard says the current geopolitical state means investing in the global economy poses greater risk — including the role political issues play in determining investment opportunities. In any case, she says, the province’s economy will not be the same as it was before COVID-19 or the Russian invasion of Ukraine.
