MCWC Press Release: Michigan Potash Woes

MCWC Press Release February 10, 2019

“We Did Not Cause Michigan Potash’s Woes!” says MCWC head.

Last week Michigan Potash Company notified its leaseholders that it would
unilaterally extend the terms of their leases, naming a local environmental
group as the reason.

Eight years ago, the company began acquiring leases to solution-mine
potash under approximately 15,000 acres in Osceola & Mecosta Counties.
Most of those leases are due to expire in the next two years but last week,
in a letter to landowners, company president Theodore Pagano stated that
the company was invoking an obscure “Force Majeure” clause to extend
the leases indefinitely. Mr. Pagano said the action was triggered by
MCWC’s challenge of Michigan’s Dept. of Environmental Quality’s issuance
of drilling permits.

“The term ‘force majeure’ literally means ‘major force’ and is meant to apply
when some large, unforeseen occurrence prevents a company from acting.
This would normally apply to events such as earthquakes, hurricanes,
wars, etc. MCWC President Peggy Case finds this amusing: “It’s
actually quite flattering to have Michigan Citizens for Water
Conservation, an all-volunteer, grass-roots organization, achieve the
status of a hurricane. Unfortunately, though, Michigan Potash’s
wounds are largely self-inflicted. These ongoing years of delay are
more likely due to questions as to whether the venture will generate
any profit.”

Ms. Case went on to point out that: “This operation would face stiff
economic headwinds with potash prices chronically depressed from
worldwide over-capacity, lack of rail-access, and what appears to be a
troubling debt-load. On top of that, they’ve picked a site which invites
environmental destruction on a major scale!

Ms. Case questions the company’s priorities: “From the start Michigan
Potash has focused its efforts mainly on mounting an aggressive P.R.
campaign extolling the wonders of their venture, while doing none of the
environmental testing and assessment required by Michigan law. If the
company had put sufficient resources into developing a viable site and a
viable business-plan, they’d be much farther ahead today.”

Ms. Case wonders what MPC hopes to accomplish with this latest
maneuver: “In my opinion, MPC is stretching the definition of what a “force
majeure” actually means. It appears the company is trying to extend those
leases now so that MPC does not have to pay out more money for a new
set of leases and try to convince landowners to sign new ones now that it
has become clear how MPC operates.

Most of those landowners now know better than to sign an MPC lease “as-
is” and will insist on a number of added assurances such as:

  • No changes to the surface of their land.
  • Guaranteed protection of their well-water.
  • Full insurance coverage of damage to property and environment
    (especially to water resources above and below ground).
  • Required use of the best available technology to minimize noise, dust, and
    poisonous gases.

A written guarantee and description of how royalties will be apportioned.
MPC will especially want to sidestep that last item. They’ve been telling
leaseholders that all will share 5% of total profits, but their leases contain
the following clause: “The lands unitized shall be of such size and extent
as Lessee shall determine in Lessee’s sole judgment.” Potash is not like oil
or gas which flow into a well from outlying areas. MPC decides where to
locate their well-bottoms (which they’re keeping secret), and that will
determine where the cavities will be. Since the company is the “lessee”,
they can pay royalties to no one other than themselves by mining beneath
their own property. (Incidentally, that is exactly what PPG did when they
tried mining nearby.)”

Ken Ford MCWC Board Member
Peggy Case MCWC President

Leave a Reply

Your email address will not be published. Required fields are marked *