17 May 2011 17:13 [Source: ICIS news]
By Lauren Williamson
LONDON (ICIS)--Sirius Minerals announced on 13 May that it has bought an additional 1,300 hectares (3,211 acres) of onshore mineral rights in northern ?xml:namespace>
However, it still faces numerous complications before it can move forward with building the
The new mineral rights acquisition “gives us further confidence in defining a significant, world-class potash project”, said Sirius CEO Chris Fraser.
The recent purchase, which adds to the 600 square kilometres (232 square miles) already owned by the company's York Potash project, adds emphasis to the company’s push for exploration. Last week, the
Park authorities suspect that a mine proposal will be submitted by January 2012. But there are plenty of obstacles before Fraser’s “world-class potash project” can be achieved.
To start with, the majority of Sirius’s mineral rights are located on land within the national park.
“This area includes Robin Hood’s Bay and major footpath routes and long-distance walking routes. That coastal region was designated as a heritage site back in 1982,” said Tom Chadwick of the North York Moors Association, a charity group that serves as an environmental watchdog for the area.
Members of the association have expressed concern about the possibility of a new mine. Chadwick himself describes the nearby Boulby mine, the
The association is particularly concerned about increasing the amount of submarine discharges of waste product, otherwise known as tailings. It says the tailings from Boulby have had an impact, with grey sediments building up on sea beds off the coast. Chadwick claims this has harmed the local marine biodiversity.
“Submarine tailings disposal is something of a global disgrace, as is often the case in mining, [mining is] just a destructive industry,” added Chadwick.
Beyond this, it is feared the local tourism industry may be damaged by a second mine. Chadwick says tourism in the area has grown in recent years because the recession prompted more English residents to travel within their home country to save money. He predicts the industry now brings in more than £260m ($161m/€223m) a year.
Though Sirius says it is engaging with local communities and considering the concerns of conservationists, Chadwick’s organisation has not yet heard from the company.
As it stands, the laws on development in national parks are not in Sirius’s favour.
“There is long-standing government advice… that the government has a commitment to protect national parks,” said Chris France, director of planning for the
As far as developing within the park,
“Clearly, we do not have a proposed mine head location as yet,” said Sirius spokesman Gareth Edmunds, who also added that it was too early to release specific intentions for the project as future development plans will hinge on the borehole results.
But for Sirius, the
The RAF station in the park was built as it met national security interests during the Cold War. National interest justification was also used for the Cleveland Potash Boulby mine, constructed in the 1960s. It was allowed to develop within the park based on economic grounds, as it created hundreds of jobs and helped boost national exports. Sirius is expected to make similar arguments.
Boulby has a production capacity of around 1m tonnes/year, and according to the International Fertilizer Association, before the recession in 2008 the UK consumed around 515,000 tonnes of potash a year, meaning additional potash production in the UK would contribute positively to the country's trade balance.
Sources close to the York Potash project say a new mine in the region could produce anywhere from 1m–3m tonnes/year. Sirius also says that a new mine would create 5,000 jobs.
Whether or not this is a strong enough rationale for the park to rule in Sirius’s favour – should Sirius actually seek to build a mine within the park – will be a contentious issue.
Granular muriate of potash (MOP) is currently selling at $525/tonne CFR (cost and freight) into South American markets.
Current global potash demand for 2011 is pegged around 60m tonnes, and is expected to increase as the world struggles to feed a growing population.
But exactly how much potash York Potash could potentially produce is subject to some debate.
Based on the initial 600 square kilometres of mineral rights from Sirius's acquisition of York Potash in January 2011, the project has an exploration target of 330m–400m tonnes of 35–50% potassium chloride, according to the company’s website, with an additional target of 3.3bn–6bn tonnes of 67–94% polyhalite. Polyhalite is a mineral compound from which specialty fertilizer sulphate of potash (SOP) can be produced.
One European potassium fertilizer producer says it is still unclear exactly how much SOP can be derived from polyhalite and that the process is largely theoretical. Yet IC Potash’s
IC Potash’s confidence – projecting to have the mine producing by 2015 – has surely boosted Sirius’s confidence in its ambitions for the York Potash project. However even if a mine proposal is approved for the project, York Potash would still be at least six years away from actual production.
($1 = £0.62/€0.70)
For more information on potash and other fertilizers, visit ICIS Pricing Fertilizers.
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