Sulphate miners chasing overseas buyers

One of five WA companies in a race to be first to produce SoP from remote salt lake brine, Kalium Lakes Ltd (KLL), advised the Australian Securities Exchange (ASX) last week it had turned its marketing attention to China, the world’s biggest producer and user of SoP fertiliser.

KLL announced it had signed a memorandum of understanding (MoU) with Yunnan Jingyifeng Supply Chain Management Co Ltd (JYF) for sale of SoP produced at its Beyondie project on a chain of salt lakes 160 kilometres south-east of Newman in the Little Sandy Desert.

Under the non-binding MoU, JYF will consider buying between 50,000 and 80,000 tonnes per annum of SoP from the Beyondie project’s annual production.

It will market the WA SoP to its customers in Yunnan Province and neighbouring Guizhou and Sichuan provinces in south-west China.

According to KLL, JYF is a major marketer of solid and liquid fertilisers in south-west China with international and domestic trading, supply chain management and transport experience in vegetable oils, UAN liquid fertilisers, urea, ammonia nitrate, sulphur, sulphuric acid and phosphoric acid.

In June KLL announced a similar non-binding take-off agreement with Hamburg, Germany-based global bulk and containerised commodity and specialty fertiliser marketing and distribution giant, Wittraco Düngmittel GmbH.

Under that deal KLL proposes to sell 20 per cent of the Beyondie project’s annual SoP output to Wittraco during the first five years of commercial production.

KLL hopes to eventually convert both MoUs to binding supply contracts.

Managing director Brett Hazelden said signing of a second Beyondie project MoU was “another indicator that international demand for SoP remains strong”.

He said it also highlighted the increasing level of overseas interest in the Beyondie project.

“Both companies (KLL and JYF) are looking to establish a long-term relationship that will provide a degree of certainty, in terms of production and supply,” Mr Hazeldean said.

“We also remain focussed on supplying SoP to the Australian market and supporting our local agricultural industry.”

As previously reported in Farm Weekly, the global SoP market is estimated at seven million tonnes per annum with annual growth of 5 per cent and only three other countries produce volume SoP from brine - China, United States of America and Chile.

Australian agriculture uses 30,000-40,000t of imported SoP annually which sells for about $950/t.

Companies racing to produce it from WA salt lake brine hope to do so for about one third that price.

The Beyondie project’s exploration and miscellaneous licences cover about 2400 square kilometres of salt lakes and desert.

KLL has already produced potassium salts at its large-scale pilot system of lined, gravity flow, solar evaporation concentrator and harvest ponds constructed off the salt lakes surface near its base camp.

Sub-surface high-potassium brine is pumped from a bore field out on the salt lakes into the first of the concentrator ponds.

The company already has an MoU in place with Mid West Ports so granular SoP fertiliser can be exported via Geraldton.

Last Friday KLL said it has received a total of $1,881,570 in research and development tax offsets for the 2016-17 income year for approved activities in WA and overseas in relation to the Beyondie project.

“Accessing the R&D Tax Incentive program is an important factor which supports the future development of the company and the resources industry,” Mr Hazelden said.

“At a time when 100pc of this product (SoP) is imported into this country, we remain absolutely focussed on achieving our goal of becoming the first potash producing project in Australia.

KLL’s closest rival, Australian Potash Company (APC), last week deferred for five days the eligibility date for shareholders able to take up a one-for-three “loyalty” options issue at a cent per option.

Shareholders on the company register as of yesterday, Wednesday, are now entitled to the offer which APC has said will raise up to $833, 981 in working capital.

Options are exercisable at 20c before October 25, 2019, and entitle the holder to one share per option.

Earlier last month APC told the ASX that 20pc of its stage-one bore field to pump brine from beneath Lake Wells, 198 kilometres north-east of Laverton, was “on track” for completion before the end of the year.

Five test production bores would be supplemented with a further two installed this month before a 12-week test pumping program, APC said.

It is commissioning unlined pilot concentrator ponds built on Lake Wells but plans to build harvest ponds off-lake.

In June APC announced it had signed non-binding MoUs to supply up to 200,000t/pa of SoP fertiliser from its Lake Wells project to Chinese fertiliser companies.

One of the MOUs is with Sino-Agri Holding Company Ltd, one of China’s biggest fertiliser producers, traders and distributors.

The other is with Hubei Agriculture Means of Production Group Co Ltd, a big provincial fertiliser distributor and importer.

APC is predicting stage one Lake Wells SoP production of 150,000t/pa and stage two full production of 300,000t/pa.

It proposes to rail bulk SoP from Laverton to Fremantle for export.

Last month APC’s neighbour at Lake Wells, Salt Lake Potash (SLP), announced laboratory testing of a 60 kilogram representative sample of kainite harvest salt from its Lake Wells site had produced “excellent” results.

SLP said tests confirmed an overall potassium process recovery of 92pc was achievable and the SoP produced would exceed the industry high-grade benchmark of 52pc potassium oxide and 54pc sulphate.

The tests also confirmed a possible magnesium sulphate co-product with minimal additional processing.

Canada’s applied science researchers and recognised potash process leaders Saskatchewan Research Council conducted the tests, SLP said.

Also last month, Agrimin Ltd announced it had started a 40-day pump test at two pilot trenches on Lake MacKay on the WA-Northern Territory border and that nine pilot trenches had been dug by a 25-tonne amphibious excavator as part of its SoP project.

A total of 20 trenches are planned.

Agrimin proposes using trenches to accumulate shallow brine rather than pumping it from beneath the lake surface.

It is also searching off lake for an aquifer source to provide potable water for its work crews.