October 10, 2008 / 7:22 PM / 9 years ago

Potash Corp tells workers to take deal amid turmoil

WINNIPEG, Manitoba (Reuters) - Potash Corp of Saskatchewan has urged striking miners to accept its latest contract offer because the global economic crisis could make it hard to justify its proposed wage and pension increases in the future.

In letters to striking employees dated October 8, Garth Moore, president of the potash division at the world's largest fertilizer producer, described the "significant financial turmoil" that has hurt businesses, governments and jobs.

"In this uncertain current global environment, we cannot provide assurance as to how long we can continue to justify our outstanding contract offer," Moore wrote in the letters.

"Our offer remains on the table for now, and we would like to see you vote on it," Moore said.

The Steelworkers union accused Potash Corp of trying to circumvent the legal bargaining process by sending the letters, and said it may consider filing an official complaint about "bad faith bargaining," spokesman Roger Falconer said.

The company should not have told workers to ask the union to hold a vote on the contract, and should have approached the Steelworkers instead of issuing an "implied threat" about hard economic times, Falconer said.

In July, Potash Corp offered workers at three of its mines a contract it said would increase salaries by up to 35 percent over three years. But the miners walked out on August 7 after talks broke down, and the two sides remain at an impasse.

The United Steelworkers union, which represents the 500 mine and mill workers, says employees deserve a bigger piece of Potash Corp's record profits, which were boosted by booming grain markets and tight world supplies of potash, causing prices for the fertilizer to more than double this year.

Potash Corp shares climbed to a record C$246.29 on the Toronto Stock Exchange by mid-June, but have since plunged 59 percent as investors bailed out of commodity-based issues and financial markets retreated.

Potash Corp was down C$4.43 at C$102.57 in Toronto on Friday, after sagging to a year low of C$84.45 on Monday.

The company wanted to tell workers its offer was attractive given the economic climate, spokesman Bill Johnson said.

"We indicated to them that given the uncertain times, that really every business in the world is currently facing, we do not feel that we have any additional flexibility in bargaining," Johnson said.

The Steelworkers' Falconer dismissed the company's talk of hard times.

"We think that's nonsense," he said, noting potash fertilizer prices haven't budged despite plunging stock markets, and the company has not scaled back $6 billion in expansion plans.

"They (workers) understand this company's doing really well in spite of the meltdown in the markets ... and they want to share those profits," Falconer said.

He added the union does expect Potash Corp's quarterly results, slated for October 23, to be hurt by the loss of production due to the strike.

The affected mines account for about 6 percent of world production and 30 percent of the company's annual output.

Potash Corp has kept the largest of the three mines open using management and non-unionized workers, but has not said how much it can produce without its regular work force.

($1=$1.20 Canadian)

Reporting by Roberta Rampton; editing by Rob Wilson

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