Sask. 'well-positioned' to fill resource gaps left by war, sanctions on Russia: economic experts

Russia's invasion of Ukraine has led to significant gains for Saskatchewan's resource-based companies, industry experts say.

Cameco Corp., a Saskatoon-based company, announced last week that it has agreed to a multi-billion-dollar contract with SE NNEGC Energoatom — Ukraine's state-owned nuclear energy utility — to meet Ukraine's full nuclear needs from 2024 to 2035.

Tim Gitzel, Cameco president and CEO, says the Russian invasion of Ukraine raised their outlook because the world needs to find other sources of uranium.

"That allows us now to boost our production here in Saskatchewan," he said.  "The future looks really, really good for Cameco, for our employees and for Saskatchewan."

In 2018, Canada, the world's second largest supplier of uranium, produced 6,996 tonnes of uranium from mines in northern Saskatchewan, according to federal government statistics.

Gitzel says Cameco will supply uranium to nine nuclear reactors still under Ukrainian control, and the remaining six at Zaporizhzhia if Ukraine regains command of the site.

He estimated about two-thirds of power in Ukraine is fuelled by nuclear power.

"It was more than just a sale for us," Gitzel said. "Those are our friends over in the Ukraine … and we wanted to show that we would stand shoulder to shoulder with them."

Gitzel adds that Cameco is speaking with other countries that are turning away from Russian-supplied uranium.

LISTEN | Tim Gitzel speaks about Cameco's deal to sell uranium to Ukraine

Saskatchewan is "well-positioned" to take advantage of other new voids in the resource sector, according to Samuel Gamtessa, an associate economics professor at the University of Regina. The province could be a big winner on the global market for potash and grain — Saskatchewan's second- and third-largest exports that account for 30 per cent of the resources sent out of the province.

Belarus and Russia had comprised about 35 per cent of the world's potash supply, Gamtessa says, but as sanctions over the invasion have taken hold, Saskatchewan has ramped up production.

The province already produces about 35 per cent of the global supply, but Gamtessa says it could as much as double its capacity.

"Saskatchewan is ready and capable to service … or replace those shortages on the global market," he said.

Both Ukraine and Russia were major exporters of grain, but with the invasion affecting Ukraine's production and the sanctions affecting Russia's, that has left a hole in the market.

That could include Saskatchewan's wheat production, which accounted for 11 per cent of exports in 2021.

Ellen Goddard, an agricultural economist at the University of Alberta, says it's a sad reality that Saskatchewan's economic outlook has improved because of the war in Ukraine and  the earthquakes in Turkey and Syria .

"It's complicated, but it looks like that demand will continue to be there for quite some time into the future," she said, noting floods in Pakistan wiped out crops as well. "If farmers can produce and the weather obliges there's going to be quite a good demand for their output."

Prior to the war, Goddard says, food demand rose because as COVID-19 restrictions were relaxed, people began returning to restaurants.

She says most provinces were expected to be in a deficit because of spending on COVID-19, but because of inflation and increased demand governments found themselves with a surplus.

"Even beyond the traditional things that we've exported, provinces like Saskatchewan have set the groundwork in place with some of those budgetary surpluses so that we could be major players in things like rare earth [elements]," she said.

LISTEN | CBC's Theresa Kliem breaks down rare earth elements from inside Canada's first rare earth factory processing facility

Goddard says the current geopolitical state means there's greater risk in investing in the world economy — including the role political issues play in determining investment opportunities. In any case, she says, the province's economy will not be the same as it was before COVID-19 or the Russian invasion of Ukraine.