Prospective potash players pick up the pace in Australian SOP race

Author: Andy Hemphill


LONDON (ICIS)--Australia’s prospective sulphate of potash (SOP) producers continue to accelerate in the race to be first to market with low-chloride fertilizer drawn from Western Australia’s brine-rich lakebeds.

‘Potash’ is an umbrella term used for fertilizers with a high potassium content. The most common form is muriate of potash (MOP), which is suited to mass-produced crops such as rapeseed.

MOP accounts for 95% of global potash trade, amounting to around 69m tonnes/year. The SOP trade is far smaller, at 7-8m tonnes/year. SOP is a chloride-free fertilizer suited to high-cost products like tobacco, fruit and some vegetables.

SOP can be produced through the Mannheim process - which reacts MOP with sulphuric acid - or via brine extraction.

While the five prospective brine-based Australian SOP producers: Salt Lake Potash, Kalium Lakes, Australian Potash, Agrimin and Reward Minerals, have made considerable steps in recent months, all still have some way to go, with many legal and logistical hurdles ahead.

Three have taken especially big steps since the start of October - Salt lake, Kalium and Agrimin.

On Tuesday 8 October, Salt Lake announced the completion of a $10m tenement purchase from gold prospector Blackham Resources.

Salt Lake holds approximately 290 square kilometres (km2) of land at Lake Way in Western Australia, which sits over a paleochannel – an ancient, inactive, brine sediment-laden river, which can be extracted and processed into SOP fertilizer.

Blackham operates the Matilda-Wiluna gold mine at the northern end of the lake, and held permits for 64 km2, which are now in Salt Lake’s possession.

The gold prospector retains exploration rights over its former tenements, including the site’s brine-filled Williamson pit, which is being drained by Salt Lake as part of the agreement.

“Completion significantly de-risks the Lake Way Project by providing ownership of tenements and further access to key infrastructure assets including water and power,” adds Salt Lake CEO Tony Swiericzuk.

A few days earlier, the board at rival start-up Kalium Lakes approved the full development of its 100% owned Beyondie Sulphate of Potash Project (BSOPP,) which is located 160km south east of Newman in Western Australia.

In a statement, the firm said the decision follows the successful completion of its A$72m ($49m) capital raise in August.

That funding complements loan facilities provided by KfW IPEX-Bank (about A$102m) and Northern Australia Infrastructure Facility (A$74m), plus a working capital facility from Westpac Banking Corporation (A$15m).

The final investment decision (FID) allows the acceleration of activities from the current approved early works programme to full scale construction, meaning it can now finalise the remaining key construction contracts.

Meanwhile, Agrium, which counts the Lake Mackay project as its flagship development, is working on the opposite end of its production chain; signing up an engineering firm and barge-loading service at Australia’s coastal Wyndham Port in early October.

Agrimin signed Kerman Contracting for its Wyndham Port facility and has requested the firm draw up plans for a truck unloading hopper, covered storage sheds, granulation equipment, workshops and offices.

Five days later, the developer tapped logistics provider Transhipment Services Australia (TSA) to provide barge-loading services for the as-yet unbuilt Wyndham complex.

Under the memorandum of understanding signed with TSA, the logistics firm’s services will be fully integrated into Kerman’s design for the loading facility.

Agrimin’s announcements are no-doubt welcome news for investors, especially as the sheer distances involved for all five prospective SOP producers are a key challenge.

Starting at their respective sites in the Outback, Australian Potash and Salt Lake are both using rail connections from the railhead outpost of Leonora - although this requires a truck journey of 280km (174 miles) and 111km, respectively, before material can be loaded on railcars.

From there, the companies will ship SOP to the coastal ports of Fremantle, Esperance and Geraldton.

Reward, Agrimin and Kalium, meanwhile, will stick to the roads, with each considering routes of up to around 10,000km from salt lake to port.

Despite this month’s investor-pleasing news for Salt Lake and Agrium, none of the five is yet to begin actively producing SOP in bulk, and all are still at relatively early stages of development.

Developmental SOP producers in Western Australia

Company Claim / Area (km²) Estimated SOP resources (tonnes) Offtake agreements
Salt Lake Potash Goldfields / 3,300 290m-458m 50% of all production to China’s Sinofert.

50% from 50,000 tonne/year demonstration plant to Mitsubishi.

Kalium Lakes Beyondie / 2,400 180,000 tonnes/year over 30-50 years 75,000 tonnes/year to German MOP major K+S, 10-year term.
Australian Potash Lake Wells / 1,200 14.7m over seven years MOUs with China’s Sino-Agri and Hubei-Agri for up to 200,000 tonnes/year
Agrimin Lake Mackay / 4,370 426,000 tonnes/year over 20 years None confirmed
Reward Minerals Lake Disappointment / 5,000 9m tonnes over 25 years None confirmed


Pictured: The earth beneath Australia’s salt lakes is rich in potassium-laced brine
Source: Alessandra Sarti/imageBROKER/Shutterstock

Focus article by Andy Hemphill

Additional reporting by Richard Ewing