Carlsbad, Oct 7, 2004 - The U.S. House on Monday approved the addition of language to a bill that would reduce the royalties potash companies pay the federal government.
The language would reduce the royalty rate on the output from federal lands of potassium and potassium compounds from the mineral sylvite to 1 percent from the current 2 percent for a five-year period.
U.S. Rep. Steve Pearce, R–N.M., proposed the provision in the bill.
“I urge the Senate to consider this important piece of legislation and pass it as quickly as possible. This bill will revitalize the potash industry and have a significant positive economic impact in New Mexico by helping the industry remain competitive with foreign imports and keep high-paying jobs in the United States,” Pearce said in a news release.
Randy Foote, plant manager of Intrepid in Carlsbad, said the reduction would increase the stability of the local potash mining industry by allowing companies to improve equipment.
“The potash industry has gone through a period of time of very poor markets and escalating costs. We have been fortunate that the markets have been improving, but we are coming from a time when the economic situation had deteriorated. Now, equipment is in bad shape. We need to (make capital improvements) to the mine to be strong in the future.”
Domestic production of potash has declined from 3.45 million metric tons in 1991 to 2.4 million metric tons in 2003. The potash mine workforce has fallen from nearly 3,000 employees to about 1,000 employees, according to a news release issued by Pearce.
Don Purvis, plant manager of IMC Global’s Carlsbad operations, said the five-year reduction in royalties will help the local potash industry’s competitiveness in the marketplace.
“What Congressman Pearce is proposing is very good for the city of Carlsbad. It will extend the life of mining operations in Carlsbad and that means jobs and income,” Purvis said.
He said studies have shown that for every mining job, three jobs are created in the local community. Purvis said the economic impact of the potash industry for the state approaches $300 million with most of that money impacting Eddy County.
“In the overall picture, a reduction in the royalties will add years to the life of the potash industry. The benefit to Eddy County is huge,” Purvis said.
Pearce agreed.
“We need to ensure this bill passes the Senate and is signed into law in order to save at least 1,000 jobs and the small businesses that are dependent on New Mexico’s potash mines,” Pearce said.
Purvis praised the efforts of the community’s federal officials, as well as local officials, to support the potash industry.
“They have been absolutely outstanding — all of them. I can’t say enough good things about them. Whenever I need them, they always want to know what they can do to help the industry,” Purvis said.
Foote said he hoped to see quick action by the Senate to pass the bill before going home for a recess during the elections.

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