Saskatchewan

K+S Potash sues equipment supplier for $180M after 'catastrophic' collapse in 2016

K+S Potash Canada has launched a $180-million lawsuit against the supplier of a gigantic piece of equipment that collapsed in K+S's mine near Bethune, Sask., two years ago.

K+S says 'flawed design' by Veolia Water Technologies cost $85M due to lost potash production

The first tonnes of marketable potash arrived in the warehouse at K+S's new Bethune potash mine in June 2017. (K+S Potash Canada)

K+S Potash Canada has launched a $180-million lawsuit against the supplier of a gigantic piece of equipment that collapsed in K+S's mine near Bethune, Sask., two years ago.  

K+S filed a statement of claim at Saskatoon Court of Queen's Bench in April, alleging a breach of contract and negligence on the part of Veolia Water Technologies, which is headquartered in France. It is unclear when the lawsuit will be heard.

K+S is trying to get some of the money by making Veolia pay back $29.5 million in credit. Veolia launched a seperate legal action to get out of those payments. That matter was recently heard in Saskatchewan's Court of Appeal.

In 2012, K+S Potash entered into a contract with Veolia to the tune of $324 million US for the design and supply of a crystallization and evaporation system for its legacy project potash mine near Bethune, according to court documents. 

The Bethune mine was the first potash mine to open in Saskatchewan in 40 years. 

Overnight collapse

Court documents detail how a dispute began in 2016. It says on July 17, one of the plant's crystallizers was being prepared for testing when its steel frame collapsed around 4:30 a.m. CST.

"The incident was a catastrophic event," the statement reads, pointing out Veolia designed the steel frame and provided the instructions for testing.

Last year, a crystallizer was transported to Bethune, Sask. It stood more than twice as tall as an average sized giraffe. (Submitted to CBC)

"All construction on the process plant of the Bethune mine came to a halt as a result of the incident. The Process Plant was evacuated due to hazardous conditions, including live electrical installation, flooding from the collapsed crystallizer and the instability of the collapsed structure."

The provincial government previously described crystallizers as standing at 12 metres high and weighing almost 500,000 kilograms.

K+S cites 'flawed design'

In an email to CBC News Tuesday, a spokesperson for Veolia decline to provide comment, noting the court action is ongoing. 

K+S's statement of claim said K+S investigated and determined "the flawed design" by Veolia was to blame for the collapse. It also said K+S discovered other deficiencies in the company's design work.

Inability to produce potash cost $85 million

K+S Potash is now seeking damages of more than $180 million. Court documents outline specific damages the company said it suffered, including $65 million in physical damage and an estimated loss of $85 million due to an inability to produce potash. 

The collapses delayed the mine's production of potash by six months, according to court documents. 

K+S is also taking steps to get money through letters of credit inked with Veolia, documents that entitle payments to K+S if certain contractual obligations are not met. ​Veolia is an seeking an injunction in order to stop that because, according to court documents filed in Regina, it says K+S has not provided it a chance to remedy the issue and that there ought to be liability assigned from an arbitrator or a court.

In June, a judge in Regina dismissed Veolia's request, but the company appealed. Earlier this month, Saskatchewan Court of Appeal Justice Ralph Ottenbreit allowed for a temporary injunction on payments until the matter goes to a hearing, which he recommended to happen sometime this fall.

"We say we're entitled to do that, part and parcel of the having the letters of credit in place is to draw on them if you need to, and if there's a breach of contract—now Veolia disagrees—but that's our position on the matter," said lawyer Shaunt Parthev, who represents K+S.  

About the Author

Stephanie Taylor

Reporter, CBC Saskatchewan

Stephanie Taylor is a reporter based in Saskatchewan. Before joining CBC News in Regina, she covered municipal politics in her hometown of Winnipeg and in Halifax. Reach her at stephanie.taylor@cbc.ca

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