Potash – some much under-publicised info, at last!
- Anglo-American chemistry graduate Misha Tadman explodes most of the oft-repeated PR myths underlying the highly contentious North York Moors National Park mining proposals.
Recently I was present at a York Potash Public Meeting where a member of the public asked the question “What is ‘polyhalite’?”
The reply was that ‘poly’ meant ‘many’, and ‘halite’ meant ‘salt’.
Now to me (a chemistry graduate), this answer (coming from an engineer specialising in the transportation of polyhalite) seemed needlessly vague. My interest sparked, I Googled polyhalite and came up with a string of suggested links many of which contained information that make the words of York Potash appear a series of half-truths.
1. What is polyhalite?
Polyhalite is a hydrated sulfate of potassium, calcium and magnesium with formula: K2Ca2Mg(SO4)4·2H2O. It occurs in sedimentary marine evaporites and is a major potassium ore mineral in the Carlsbad Deposits of New Mexico.
Polyhalite is not a mixture of many salts but a particular hydrated compound, the fact that it is hydrated is a complicating factor when it comes to trying to transport it through a pipeline so this a least a pipeline engineer should have known. I also was surprised the entry contained no mention of what Sirus Minerals claims is the worlds major deposit of polyhalite.
2. Why do we need a second mine in the North Yorkshire Moors National Park?
Tue Apr 12, 2011 7:25am EDT
Fertiliser and specialty chemicals producer Israel Chemicals (ICL) (ICL.TA) said it will begin mining vast reserves of mineral salt polyhalite located at lower levels of its potash mines in the North Sea.
Geological studies conducted by ICL’s British unit Cleveland Potash (CPL) indicate that more than a billion tonnes of polyhalite ore are located in its Boulby mines in northeast England, beneath the potash that it mines, ICL said on Tuesday.
ICL said it expects to be able to mine hundreds of thousands of tonnes of the mineral during the first year at a relatively low cost.
The only answer I had heard from York Potash was that Boulby was reaching the end of its working life as their economically viable Potash was now nearing mining completion.
3. “Thousands of local jobs will be created in the refining process required to produce the fertiliser product”.
Dated March 23, 2010
Gustavson Associates LLC, Chemfelt Engineering, and Mr. James Waters MET MBA PE, were
contracted by IC Potash Corp (“ICP”) to complete an independent evaluation of the methods of producing Sulfate of Potash (SOP) from polyhalites. Based on the work of the United States Bureau of Mines and other potash producers, the conversion of polyhalite to SOP is a relatively straight forward process. The simple brine produced from the polyhalite will be harvested from solar evaporation ponds. We, the independent authors of this report, conclude that this simple, low cost, robust production method can be employed to produce SOP and that premise is the focus of this report.
Since when locally have we had the weather to operate solar evaporation ponds?
4. “Polyhalite is the most valuable mineral discovered and is in demand as a fertiliser worldwide and will provide food security for Britain”.
This consultation ran for 4 weeks and closed on 09 June 2011.
The purpose of this non-formal consultation was to invite the views of stakeholders on an amending regulation which adds ‘Polyhalite’, a crude salt of potassium, to Schedule 1 of The Fertilisers Regulations 1991.
In practice this makes Polyhalite a product prescribed under Schedule 1 of The Regulations. This technical addition introduces standards for the description, meaning, declared nutrient content and limits of variation for Polyhalite when it is sold as a fertiliser.
Defra sought views of all stakeholders who will be affected by these amending Regulations.
Summary of responses to the non-formal consultation on Polyhalite
2.1. Two written consultation responses were received during the consultation period.
2.2.One response was received from Cleveland Potash Ltd who agreed that the inclusion of Polyhalite in Section E the Fertiliser Regulations 1991 was appropriate
2.3.One response was received from the Potash Development Association. They also agreed that the addition of the mineral Polyhalite to Section E was appropriate and necessary. They stated that Polyhalite is likely to become available on the UK market and the current Regulations have no appropriate classification category for this product.
So Polyhalite was, until the end of 2011, not licensed as a fertiliser in Britain and had therefore no commercial value. Having been only available for use through one exceptional poor cropping year, the widespread benefits of its use as a fertiliser remain untested.
5. “A new polyhalite mine will bring huge financial benefits to the region”.
One company that is racing to add to the diminishing supply of SOP is IC Potash, which is currently engrossed in completing a feasibility study and finalising permitting for its Ochoa polyhalite property, in south-east New Mexico.
Following closely on IC Potash’s heels are two other miners who saw the emerging gap in the SOP market, including London-listed Sirius Minerals, which is developing the York potash project, within the county of North Yorkshire, in the UK, and Israel Chemicals, an Israeli fertilizer and speciality chemicals company, which owns the Boulby mine, in north-east England.
However, in the context of the difficult capital markets, another industry analyst Mining Weekly Online spoke to said it was unlikely that any of the junior companies would in the medium term succeed in establishing mines if the projects did not have substantial reserves and if capital costs and operating costs came in below average.
“It is all about capital risk,” he said, noting that although prices are expected to gradually rise over the medium term, investors would think hardbefore digging into their pockets to invest in a new potash play.”
Sirius’s house broker, Daniel Stewart, described the acquisition [of York Potash] as a game changer, though it is not without problems.
“The problem is that the onshore part of the properties is located within the North York Moors National Park. Clearly, planning and permitting will be the key issue going forward – indeed the company needs to get planning permission before it can even drill a series of holes to verify the old drilling data,” notes Daniel Stewart analyst Martin Potts.
“Normally, a proposal to make a substantial mineral development in a National Park would be rejected out of hand”. However, potash is an internationally scarce and important commodity and so its development could be justified in the National Interest – as indeed was Boulby mine 40 years ago.
Sirius is targeting completion of a definitive feasibility study for both granulated polyhalite and NPK production during the second quarter of 2013.
Published on 01/10/2012 14:45
THE managing director of Cleveland Potash has said that it is “business as usual” after announcing that the company will be conducting further research into the development of Boulby Mine.
As a result of the additional research into the proposed development of a manufacturing plant at the site, Cleveland Potash will lose a £13million grant it had been awarded from the Regional Growth Fund.
However, Phil Baines said that the decision to waive the grant will not affect the mine’s ongoing operations, which continues to extract potash, rock salt and polyhalite.
He added: “As far as Boulby Mine and our workforce are concerned it is business as usual. We are the only company in the world to successfully mine polyhalite and we are intending to invest millions of pounds in additional mining equipment in response to increasing demand from customers in the UK and worldwide for our Polysulphate fertilizer.”
CPL began mining polyhalite in 2010, becoming the first company in the world to mine, process and sell the mineral. The company currently markets the processed polyhalite under the brand name ‘Polysulphate’ worldwide through the network of its parent company, ICL Fertilizers.
In the face of the proposed York Potash project, CPL have sought to reassure residents that Boulby Mine still has a productive future ahead and Mr Baines added: “Our offshore seismic survey and core samples of polyhalite from underground exploration drilling indicate that there are over a billion tonnes of high-grade polyhalite located in CPL’s mining area at Boulby, in a thick seam at a relatively low depth that is readily accessible from our existing mine workings. We look forward to developing this substantial asset in addition to maintaining our position as the UK’s largest mine and sole producer of potash.”
Sirius Minerals is a globally diversified potash development company. Its primary focus is to bring on stream major potash mining facilities through the acquisition and development of projects overlying recognised potash deposits. Today it holds properties in the United Kingdom (North Yorkshire), the United States (North Dakota), and Australia (Queensland). Incorporated in 2003, Sirius Minerals’ shares are traded on the London Stock Exchange’s AIM market. Its shares are also traded in the United States on the OTCQX through a sponsored ADR facility.
But some analysts have started to question existing projections for the expected increase in worldwide potash demand. And near-term caution with regards to potash pricing is probably warranted given that a number of existing producers – most notably, the Mosaic Company – are in the process of expanding capacity
Sirius has opted for a simpler, lower-risk route through to monetisation. Expected operating costs come in at $36.90 per tonne, while the base case for capital development (ex debt costs) gives a net present value of $2.56bn, assuming a long-term polyhalite price of $150 per tonne. The decision to sell granulated polyhalite has substantially reduced the group’s capital requirements at a time when external financing options are no longer quite so straightforward. Sirius has been in discussions with sovereign wealth funds, and has not ruled out an offtake agreement as a means of securing capital. Still a speculative buy at 21.87p.
The risk of structural disturbance at SM7A was confirmed by results showing that the polyhalite seam is cut by a minor fault zone, and another minor fault zone features above it.
At SM7B two ‘relatively massive’ beds of polyhalite have been confirmed but it has not been possible to identify faulting nor estimate the true seam thickness. Further studies including chemical analysis and detailed inspection of logs will follow, and interpretations are open to refinement.
This series of articles casts many shadows on the promise of financial prosperity arising from the mine at Doves Nest Farm:
- a) Is it under capitalised?
- b) Will York Potash be forced to sell out to less ‘local friendly’/environmentally concerned investors?
- c) Will employment at Boulby survive local competition?
- d) Worse still, will Cleveland Potash and York Potash succeed in taking each other out of the market?
- e) Can the local geology withstand the impact of another deep mine?
- f) Can a National Park be maintained in the face of increasing industrialisation
- g) Will the tourist industry crumble under the burden of ever increasing urbanisation?
I am becoming increasingly cynical about the incomplete nature of the information being fed to the public by all concerned with the York Potash project. I am reminded of the adage:
“If it seems to good to be true, it probably is!”
Are we being scammed?
I believe so!