The Potash Corporation of Saskatchewan has issued a blow to one of the Alward government's hopes for job creation in the province.

The company is laying off more than 1,000 people, including 130 in New Brunswick, due to what it describes as slumping demand for its potash and phosphates, which are used to make fertilizer.

Just last week the provincial government issued a request for expression of interest to explore for and mine potash in New Brunswick.

Expansion of the potash industry can play a major role in bringing investments, revenue and jobs to the province, Energy and Mines Minister Craig Leonard had said.

The PotashCorp layoffs in New Brunswick will begin in March and will be permanent, said Stewart Brown, manager of the mine in Penobsquis, near Sussex.

hi-nb-potash-corp-852

The 130 layoffs in New Brunswick will begin in March and will be permanent, says mine manager Stewart Brown. (CBC)

Demand has been flat, but the company will push ahead with opening a nearly $2-billion mine next year, said Brown. The new Picadilly plant, located next to the existing facility, can produce twice the volume with lower operating costs, he said.

About 100 of the 530 existing workers have already moved over to the Picadilly project. Brown expects about 400 will eventually find a place there.

'Devastating' for town

Picadilly will not ramp up to full production, however, while the markets are soft, he said.

"We haven't seen the growth in the emerging markets that we had hoped for. We built the production capability that would allow us to service those emerging markets as they come online, but at this time there still has been some reluctance in terms of actually purchasing product."

Potash from Sussex will continue to be shipped through Port Saint John until about June, said Brown. Potash accounts for more than a third of the port's revenue.

Sussex Mayor Marc Thorne says many families in his town will be devastated after hearing about the job cuts.

"People have always looked to the mine to supply high-paying jobs that are career oriented and for a lot of people, the mine being here has provided an opportunity to stay in the area and raise their families and have a successful career," he said.

The town is used to the ups and downs of the potash markets and temporary layoffs, but this time, the cuts are permanent, said Thorne.

Information meetings for the non-unionized workers began at 7:30 a.m. on Tuesday and were expected to continue into the evening.

The most senior workers will be asked to consider voluntary severance packages.

Atlantic Potash continues exploration

Meanwhile, the Atlantic Potash Corporation, which has a three-year agreement with the provincial government to explore the feasibility of building a mine in Millstream, west of Sussex, recently completed 3D seismic exploration of the area, according to an emailed statement from one of the directors, Keith Attoe.

"The potash industry is experiencing fluctuations in demand and pricing that occur from time to time. These fluctuations are not new to us and at current levels do not affect our projects at Millstream or in the Saint John Industrial Park," Attoe said.

The 3D data has been sent off for computer modeling, which could take up to six months, he said.

The company's next step in assessing the potash deposits in the area is to drill for core samples, said Attoe. Preparation work for that is already underway with drilling expected to start early in the new year and be completed before Labour Day, he said.

Atlantic Potash Corporation holds key mineral rights for about 10,000 hectares of land in Millstream.

The company's website says New Brunswick stands to benefit from $4.5 million in capital costs during the exploration phase, more than 16,700 direct and indirect jobs during the construction phase, and about $40 million annually during operation.

The GDP contribution is expected to be $1.3 billion during construction and $193 million annually during operation, the website states.

New Brunswick could also see about $160 million in taxes during construction and $23 million in annual taxes during operation, according to the website.