Yellow gold is the traditional kind of gold − heavy, glittery and likely to be found in Fort Knox. “Black gold” is a term that is often used when speaking about another valuable commodity, oil. Now there is a new kind of gold that is being talked about, “pink” gold. Pink is for potash, which has a light reddish hue.

Potash, due to its importance in fertilizer production, is approaching the same pricey domain as gold. My first time for seeing the phrase “pink gold” was in an article by Diana Wyman in the May 2008 edition of Statistics Canada’s Canadian Economic Observer.

Ms. Wyman’s article, entitled From lagging to leading: Newfoundland and Saskatchewan dig into the resource boom, outlines the remarkable transition of two of Canada’s former “have not” provinces into “have in abundance”. The reason is due to natural resources. Much of what follows is based on Ms. Wyman’s research.

The world-wide commodity boom began in 2002. Oil has led the way with a quadrupling in price since then. A perfect example of how emerging nations are upping the demand for the world’s commodity supplies can be found in China. The volume of China’s oil imports has doubled since 2002, but the dollar value of its oil imports has increased by a factor of six. The same kinds of gains have been experienced in many other commodity areas.

One of my earlier blog entries set out the remarkable growth in Gross Domestic Product (GDP) per capita in Newfoundland and Saskatchewan. Over the past ten years, Newfoundland and Labrador’s GDP per capita has tripled while Saskatchewan’s has risen by 80%. The increase for Canada as a whole has been 57%. (Alberta has been the other province with remarkable growth − a doubling in GDP per capita over the past decade.)

Alberta accounted for nearly two-thirds of Canada’s crude oil production in 2007. Saskatchewan came next at 17%, followed by Newfoundland at 14%. The recent discovery of the Bakken shale oil field in southeast Saskatchewan further increases the province’s potential in fossil fuel production considerably.

Saskatchewan’s top international export is crude oil at 35% of the total. However, the province does have remarkable assets in other areas as well. Agricultural products amount to 30% of the province’s total exports, with potash (15%) and uranium (5%) also contributing significantly. (With respect to uranium, Saskatchewan supplies about 30% of the world’s needs.)

The province’s top agricultural crop is wheat, but canola, flaxseed, peas and lentils are also important. Growing middle classes in China and India are driving up demand for agricultural products and not just for the old standbys, such as wheat and rice, but also for other grains and dairy, meat and poultry products.

The world-wide surge in demand for agricultural products has caught suppliers short. The response has been a move to more intensive farming and this requires a greater use of fertilizers. Harvesting of crops removes potassium from the soil which needs to be replaced. Potash is the answer. Saskatchewan, Belarus and Russia are the dominant players in world potash supply.

The most recent contract signed between Canpotex, which represents Saskatchewan’s potash producers, and the major buyer in China, Sinofert, calls for a tripling in the price to almost $600 per tonne versus just last year. A similar agreement has also been reached with India. The United States and Brazil are the provinces’ other largest customers.

An indication of the surprising scope of the world-wide market for fertilizer can be found in the stock market. Potash Corp. of Saskatchewan is one of the major fertilizer companies in the world. It has become a star performer on the Toronto Stock Exchange (TSE) and is one of the largest companies by weighting in the TSE’s composite index.

As for Newfoundland and Labrador, the Hibernia, Terra Nova and White Rose offshore oil platforms have all come into production within the past ten years and a revenue-sharing agreement has been reached between the province and the owners that will see a fourth site at Hebron begin production by 2015. These offshore fields are located in an area with the colourful name “Iceberg Alley”, which lies 350 kilometres southeast of St. John’s.

Also, the Voisey’s Bay nickel/copper mine in Labrador, combined with an expansion by Iron Ore Company, are causing significant expenditures on base metals in the province. China, Germany, Japan and the U.S. are the top international customers for iron ore, which is primarily use in steelmaking. All of this resource work has provided relief from the tough times that fell on the province after the moratorium on cod fishing was imposed in 1992.

The old saying is that people “vote with their feet” on certain issues.You can move into or out of a region depending on the local economy. The bottom line is that Newfoundland’s population has started to increase again for the first time in fifteen years. Saskatchewan is also showing population gains after a decade of losses. Something has sure started going right again for the economies of those two provinces.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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