Total Costs
PotashCorp incurred more than $176.7 million in costs in 2007 to address environmental issues. Over the last five years, operating expenses for its environmental commitments and complying with environmental laws and regulations have risen by 75 percent. They totaled $127.5 million in 2006. Capital costs to meet pollution prevention and control objectives were $48.3 million in 2007.
Environmental Costs* |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Operating Costs | 73.4 | 90.6 | 107.0 | 113.3 | 128.4 |
| Capital Costs | 13.1 | 7.9 | 10.6 | 14.2 | 48.3 |
| Total Environmental Costs | 86.5 | 98.5 | 117.6 | 127.5 | 176.7 |
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*Including reclamation costs Source: PotashCorp |
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Environmental Costs by Division
In 2007, the phosphate division accounted for 52 percent of environmental costs, potash 33 percent and nitrogen 15 percent.
Operating expenses accounted for 73 percent of environmental costs incurred in 2007.
Capital costs in the potash division increased significantly to $27 million in 2007 and accounted for 56 percent of total capital costs. Much of this was related to pollution abatement and prevention.
Environmental Costs by Division |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Potash | 18.4 | 25.1 | 28.3 | 36.3 | 57.5 |
| Nitrogen | 15.0 | 14.3 | 16.3 | 16.4 | 27.3 |
| Phosphate | 53.1 | 59.1 | 73.0 | 74.8 | 91.9 |
| Total Environmental Costs | 86.5 | 98.5 | 117.6 | 127.5 | 176.7 |
| Source: PotashCorp | |||||
Environmental Costs by Category
The major categories of environmental costs in 2007 were:
- Environmental monitoring costs of $15.6 million, which included equipment, supplies, labor and purchased services required to monitor pollutants emitted. Most of this was in the phosphate and nitrogen divisions.
- Site reclamation costs of $27.1 million, almost entirely in the phosphate division.
- Operating expenses of $40.5 million for pollution abatement and control, and waste management, mainly in the phosphate and potash divisions.
- Capital costs of $36.5 million for pollution abatement, mainly in the potash division.
- Operating costs of $22.7 million for pollution prevention, including processes, practices, materials and products that minimize pollutants or wastes, mostly in the potash division.
Environmental Costs by Category |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Environmental Monitoring | 11.3 | 14.3 | 13.1 | 13.2 | 15.6 |
| Environmental Assessment | 1.9 | 1.8 | 2.7 | 2.0 | 2.6 |
| Reclamation and Restoration | 15.1 | 21.6 | 19.8 | 21.0 | 27.2 |
| Restoration of Habitat | 0.6 | 0.7 | 1.0 | 3.9 | 4.4 |
| Pollution Abatement - operating | 24.4 | 29.1 | 38.4 | 34.7 | 40.5 |
| Pollution Abatement - capital | 3.9 | 4.0 | 4.2 | 9.6 | 36.5 |
| Pollution Prevention - operating | 16.0 | 17.5 | 20.5 | 26.7 | 22.7 |
| Pollution Prevention - capital | 8.2 | 3.6 | 5.8 | 4.1 | 5.6 |
| Site Assessment and Remediation | 0 | 0 | 0.5 | 0.5 | 7.0 |
| Other (administration, training, permits, fines) | 5.1 | 5.9 | 11.6 | 1.8 | 14.6 |
| Total | 86.5 | 98.5 | 117.6 | 127.5 | 176.7 |
| Source: PotashCorp | |||||
Site Reclamation and Remediation Obligations
After mining, PotashCorp restores and reclaims sites, incurring more than $27.2 million in 2007. These costs have averaged $21.0 million annually over the last five years.
PotashCorp's asset retirement obligations include reclamation costs related to the gypsum stack capping, closure and post-closure operating and maintenance requirements applicable to its phosphate facilities. At the end of 2007, it had accrued a total of $116.6 million for asset retirement obligations.
The company has also accrued $18.1 million for costs associated with site assessment and remediation, including consulting fees, related to the clean-up of contaminated sites currently or formerly associated with the company or its predecessors' businesses.
Certain of the company's facilities have asbestos-containing materials which it will be obligated to remove and dispose of in a special manner should the asbestos become friable (i.e. readily crumbled or powdered) or should the property be demolished. As a result of the longevity of many facilities where asbestos exists and the fact that the company does not have plans for major changes that would require the removal of asbestos, the timing of its removal is often indeterminable. Liabilities associated with these obligations will be recognized in the period in which sufficient information is available to reasonably estimate the fair value.