Plentiful potash sector sees no need for change

By IM Staff
Published: Tuesday, 09 July 2019

Abundant reserves, robust price forecasts and a lack of major catastrophes have dampened enthusiasm for innovation in the global potash industry, but does this approach risk missing important chances to improve production of one of the world’s most important minerals? Rose Pengelly reports.

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flickr 

Revolutions in agriculture over the last 50 years have rapidly changed the way crops are produced, increasing yields, reducing water consumption and improving profitability.

Further up the value chain, however, methods for producing fertilizer minerals such as potash have barely altered in decades.

Unlike other types of mineral, the world is not close to running out of easily accessible deposits of potash, so there has been little incentive to rethink how to get these minerals out of the ground.

In its Fertlizer Outlook 2018-2022, the International Fertilizer Association (IFA) says: "Thanks to sustained capacity expansions since 2010, global [fertilizer mineral] supply will be more than sufficient to meet global demand during the next five years."

"Capacity [will] increase in the three main fertilizer segments, but more rapid growth is expected for potash... than for phosphoric acid... or ammonia," the IFA adds.

In Canada, the largest producer of potash in the world, there is "no imminent shortage" of reachable deposits, according to Stephen Jasinski, mineral commodity specialist for phosphate rock and potash at the US Geological Survey (USGS).

Similarly, other top potash producing jurisdictions, including Russia, Belarus, China and Germany have ample untapped reserves and the USGS expects new mines to come online in these countries, as well as Spain, within the next few years. 

Total potash production is anticipated to hit 62 million tonnes this year, rising to 64.6 million tonnes by 2022, IFA projections show.

Steadily rising demand is expected to keep prices firm and the risk of oversupply at bay, with the majority of potash output controlled by a handful of large companies that exercise strict supply discipline.

"I think the industry is in a prolonged steady state," explains Maurice Dusseault, professor of geological engineering at the University of Waterloo in Ontario, Canada. 

"Of course there have been acquisitions and sales - the collapse of the Belarusian Potash Company in 2013, the sale of Vale’s fertilizer mineral business to Mosaic in 2016, and the merger of Potash Corporation of Saskatchewan and Agrium in 2018 to form Nutrien, being obvious examples of recent major shake-ups."

"But as far as the way the industry operates from a technical perspective goes, I don’t see any major changes on the horizon," Dusseault adds.

Yet despite this lack of fervor for change, there have been murmurs of concern from the fringes of the industry about the lack of innovation in the sector, which has resulted scant productivity gains, while water and energy usage at mines remains high and the footprint of most operations continues to be large.

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Progress for potash’s sake

According to Dusseault, there are good reasons why potash mining has not witnessed some of the technological advances or significant improvements in productivity seen in other mineral sectors.

"In terms of the evolution of the potash industry in the last 20 years, with more monitoring and analysis etc., they have somewhat increased the extraction ratio [up to the high-30% range], so they are operating at a ratio that is maybe 5% higher than they were in the 1990s," he explains.

"But most experts believe that if you start pushing the extraction ratio up towards 45%, you are asking for trouble."

Potash is a high-volume, low-value mineral (prices were around $390 per tonne in early June 2019) and there is little economic need to extract every last scrap of saleable mineral from a deposit, if it is expensive or difficult to do so. 

It is also not worth compromising the integrity of the mine or safety of its workers for the sake of a few extra tonnes.

"An issue in a big mine - some are 80 sq km underground - is that if you have a big flood, it might just ruin the whole mine. So you have to be a bit conservative in your approach," says Dusseault.

"It’s probably better to have an extraction rate of 38% and reduce the chance of flooding to a very small number, than go up to 45% when the risk of flooding is higher," he says.

Potash mining, like most underground mining activities, carries a number of risks and the industry has a significant, although not abnormally high, fatality rate. 

Last year, nine people were killed during a fire at the Solikamsk mine operated by Russian miner Uralkali in Russia’s Perm region; at least two people died following a roof collapse at the Belaruskali mine in Belarus; there were three deaths caused by electrocution at Intrepid Potash’s solar evaporation mine near Moab, in Utah, United States; and several mine workers were seriously injured following incidents at mines in the US, United Kingdom and Canada in 2018.

Generally, however, the industry has managed to avoid major accidents, fatal and otherwise, in recent years.

Dusseault believes that, after a spate of costly disasters at potash mines in Saskatchewan, Canada, and other places, this lack of major incidents in the last two decades has curtailed any urgency to change mining practices.

"They learned from the lessons of several mine floods in the 1970s and ’80s. One in 1970, the Cominco Mine, developed a leak along the shaft that flooded the mine. That mine eventually went back into operation.  In 1987, Patience Lake Mine was lost to flooding and converted to a solution mining operation for some years," he says.

However, Jasinski argues that the potash sector has at least kept pace with innovations in mining practices, even if the industry is not leading the innovation charge itself.

"There has been improved 3D modelling of deposits to reduce losses and maximize ore removal, as well as improvements to ore processing to reduce water usage and increase efficiency, and increased automation [which puts fewer workers at risk]," says Jasinksi. 

Jasinski also points to the potash industry’s adoption of better mining technology and equipment, mine safety improvements and increased preventive maintenance, which he believes have kept the sector abreast of developing best practice standards.

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Aerial shot of the Woodsmith mine service shaft (at -45m) 
Sirius Minerals 

Innovation where necessary

Because the majority of fertilizer mineral mining takes place in large and sparsely populated regions in the Commonwealth of Independent States and North America, there has been little need to minimize the footprint of mining operations.

In Russia’s Perm region, chemical pollution to water and soil and sink holes caused by underground mining operations have been reported in some areas, while even responsibly managed mines in other parts of the world have seriously impacted habitats and the landscape of their immediate surroundings.

Projects in environmentally sensitive areas or close to settlements have generally been avoided by the potash industry, as unnecessarily disruptive developments when they can build mines elsewhere.

But opportunities to produce other kinds of comparatively rare and valuable fertilizer minerals in more contentious areas have encouraged some companies to think more innovatively about mine designs.

In Yorkshire, north-east UK, Sirius Mineral plc is developing the Woodsmith polyhalite mine near the seaside tourist and fishing town of Whitby.

Situated in the North York Moors National Park, Woodsmith has attracted some opposition from campaign groups, who complained that the landscape, natural habitats and the lives of local people would be harmed by the mine’s development and that this would have a knock-on negative effect on tourism in the area.

But Sirius has managed to steer the project through the various objections, largely by designing its way around issues of concern, and has gained the approvals necessary to build what is ultimately intended to be a 20 million tonne per year polyhalite operation.

Because Sirius will be extracting polyhalite, rather than sylvite - the mineral that traditional muriate of potash (MOP) comes from - the Woodsmith mineral ore also contains sulphur, magnesium and calcium and the resource has a grade of 85.4%, so there is no need to remove any impurities to use it on crops, a step required for MOP.  

This means that Sirius expects to operate at a 1:1 mining/saleable material ratio, reducing the amount of waste while producing a more environmentally friendly product with the benefit of additional nutrients, as well as potassium.

Once completed, the Woodsmith mine will be 1,500m below the surface - significantly deeper than most potash mines around the world, which do not extend much more than 1,000m underground, although significantly shallower than some of the world’s deep gold mines.

"We’re deep, but the configuration of the strata means we are not anticipating any technical issues," explains Graham Clarke, Sirius’ operations director who is currently in charge of site construction at Woodsmith.

Although Sirius’ project is ambitious, and involves transporting ore 36.5km along a tunnel which runs from a starting point 350m underground to a materials handling facility and harbor at Teesside, on the North Sea coast, Clarke is keen to stress that the company is not pushing any boundaries in the mine’s design or planned operation.

"We’re not doing anything that’s too 'out there’ at this stage. We’ve taken quite a conservative approach to the mine design," he notes.

The mine itself will be a fairly standard room and pillar operation. Clarke says that other layouts would have worked, but the company wanted to minimize the risk profile by sticking to a tried and tested method.

"We have no different challenges to any mine in the world. Any underground mine comes with some challenges - there’s nothing different about what we’re doing," he says.

Another option that has been tested by other mining companies as a less environmentally damaging method of potash extraction is solution mining.

Developed mid-1960s, this method allows the recovery of potash found at depths too deep for conventional mining. It involves injecting a solution into the deposit and extracting a heated, saturated brine, which is then run through evaporators and crystallizers to produce a dry product.

Over time, crystallization cooling pond techniques have evolved to provide a parallel, less expensive method to recover potash and other advances in the solution method have also been made.

Saskatoon, Canada-based Gensource Potash Corp, is developing an existing concept (also developed in the 1960s) for what it says is a sustainable form of solution potash mining - known as "selective dissolution".

"Current potash production methods - conventional underground mining and conventional solution mining - were developed in the early to mid-1900s and no longer represent the most capital-efficient and environmental efficient way to produce potash," the company states.

Selective dissolution involves injecting a nearly saturated sodium chloride (NaCl) brine, utilizing brackish formation water (ie, water that is more saline than freshwater and is therefore not drinkable) into horizontal caverns.

During this process, only the KCl (potash) is dissolved, leaving other minerals intact.
The KCl-rich brine is then pumped to a process plant, where an energy-efficient cooling crystallization process removes the KCl, resulting in solid crystals of potassium nutrient. 

The remaining NaCl brine is returned to the horizontal caverns, where the cycle is repeated, creating a "closed-loop" process.

"Gensource is not inventing selective dissolution, and the concept has been discussed as being an optimal approach since 1967," the company explains. 

"Selective dissolution of potash has been successfully deployed at Intrepid Potash’s Cane Creek Mine [in Moab] since 2002. Therefore, Gensource is not reinventing the wheel; we are just perfecting it for Saskatchewan."

Indian potash

There is an argument that, in order to really revolutionize the way potash is mined, the wheel does need to be reinvented to some extent - in a place with no legacy of traditional potash mining.

India, one of the world’s largest consumers of potash, currently imports 100% (around 4.6 million tonnes in the 2017/2018 financial year, according to customs data) of the fertilizer mineral it uses, having no domestic production.

Its buying power means that Indian demand is a significant determinant of global potash prices and both established and pending exporters of potash rely on the subcontinent’s need for fertilizer to support the market.

There are however some who think India should develop its own potash industry and reduce the country’s reliance on imports - a situation which presents a major food security issue when it comes to feeding India’s population of 1.3 billion people.

JK Mohnot, chief scientist at the CSIR-Central Institute of Mining & Fuel Research in Roorkee, Uttarakhand, northern India, believes that there are "huge investment opportunities" for potash mining in India.

"The Geological Survey of India (GSI) identified deep-seated, vast reserves of potash mineralization in Rajasthan during its 1974-82 exploration work," Mohnot says.

"The probable and possible reserves of potash over an area of approximately 5,000 square kilometers in the Nagaur-Ganganagar basin in northwest Rajasthan is over 20 billion tonnes, with potash content ranging from 8% to 24%," he says, adding that "in Germany, they mine potash deposits with grades of between 8% and 16%".

Mohnot believes that with appropriate investment and technology, Indian potash production could be in the millions of tonnes per year.

But a lack of accuracy of grade determination for Rajasthan’s potash has been one of the barriers to investment in developing the deposits, according to Mohnot, whose research suggests that both conventional underground and solution mining would be viable options for local potash production.

Another barrier is Indian bureaucracy, with applications for prospecting and mining governments getting stuck in government departments for years at a time.

The IFA is not seemingly optimistic about the establishment of Indian potash mining in the near future, however, forecasting negligible production of 65,000 tonnes per annum across the South Asian region as a whole over the next few years - a long way from the millions of tonnes Mohnot believes India could produce.

Mohnot is, however, hopeful that the recently re-elected prime minister Narendra Modi’s 'Made in India’ policy will support plans for domestic potash mining. He also claims to have the support of institutional Indian investors, who will help fund exploration and production projects.

If India did succeed in developing potash mines, this would reset the global potash trade by taking one of the world’s largest buyers partly or totally out of the market.

In the meantime, without any prospect of seismic shifts in the market the foreseeable future, it looks like business as usual for the potash sector, with conservative mining approaches and dominant suppliers determining the direction of the industry.

QIA takes stake in Sirius Minerals

In May 2019, Qatar’s sovereign wealth fund, the Qatar Investment Authority (QIA), was revealed to have taken a 3.3% stake in London-listed Sirius Minerals.

Sirius is raising money to fund the development of the Woodsmith mine and QIA is believed to have acquired its stake via a $425 million share issue in April this year.

Better known for its investment in trophy UK real estate assets such as luxury store Harrods and the prestigious office and leisure skyscraper, the Shard, both of which are in London, QIA’s decision to invest in a relatively high-risk mining project more than 400km away from the capital has raised some eyebrows.

QIA could not be reached for comment on its decision to invest in Sirius, and the mining company declined to discuss the matter.

Aymen Khoury, a partner and Middle East expert at London-based law firm Fieldfisher, said that sovereign wealth fund’s stake in Sirius reflects a broader shift in QIA’s investment strategy.

"At the Doha Forum in December 2018, Qatar made it clear that it was looking to up its overseas investments and diversify. This means moving away from traditional real estate and financial services," Khoury said.

He also suggested that QIA’s investment in a polyhalite mine might be geared towards compensating for lost fertilizer imports from Qatar’s Gulf neighbors.

"The [Gulf Go-operation Council] region is already a major producer of fertilizer. The regional blockade [by Saudi Arabia, United Arab Emirates, Bahrain and Egypt, which has been in place since June 2017] accelerated Qatar’s diversification plans, and presented the country with an opportunity to transform its farming industry to bring food security."

"Investment and involvement in companies such as Sirius presents an opportunity to develop new markets and raise Qatar’s global standing in an already strong sector, by helping develop new premium, more environmentally friendly products," Khoury added.

Potash deposits in India

In north-west Rajasthan, halite belts have been identified in the local geology. 

To date, about 6 trillion tonnes of halite containing about 80% NaCl has been estimated by GSI over an area of 40,000sq km in the Nagaur-Ganganagar basin, at depths of between 300m and 900m below the surface. 

The exploration and grade estimation of potash deposits is a difficult task, as it occurs mostly in the form of highly soluble minerals. 

It is possible that high grade potash deposits exist at shallow depths of 350m in the Kalu and Jaitpura areas of Rajasthan. 

The Jaitpura area is however unsuitable for potash mining development, due to the lack of water supply and difficult terrain. 

Indian potash reserves are also found in saltpetre and glauconite deposits in the states of Rajasthan, Gujarat and others. 

Source: Adapted from "Status of Import Substitute Potash Reserves and Innovative Technology for Deep Seated Mining in India", authored by J K Mohnot and P K Singh, presented at the International Conference on NexGen Technologies for Mining and Fuel Industries (NxGnMiFu-2017) Organized by CSIR-CIMFR, at Vigyan Bhawan, New Delhi, 15-17 February, 2017, (Vol.-I, pp. 19-28).