FERTILISER produced from salt lake brine may in a little over two years replace iron ore as the major bulk commodity carried by rail to Esperance and exported via the port.
Sulphate of Potash (SoP) fertiliser proposed to be produced at Lake Wells, about 250 kilometres north east of Laverton, could also help secure the long-term future of the Leonora-Kalgoorlie rail line.
It would reverse the current flow of fertiliser through Esperance port, where 138,906 tonnes was imported last financial year.
Australian Potash Ltd, listed as APC on the Australian Securities Exchange (ASX), plans to begin producing and exporting 150,000t per annum of SoP fertiliser from Lake Wells in the second half of 2020, to coincide with peak demand in China.
Within five years it expects export tonnes to double to 300,000pa for the following 15 years – the estimated life of its Lake Wells SoP project is 20 years.
In a quarterly activities statement to the ASX last week, APC said a logistics study, prepared as part of a feasibility study for the project, “confirmed” the Lake Wells to Esperance export route “is the most efficient”.
APC plans to haul bulk SoP fertiliser from a processing plant at Lake Wells to the Leonora rail head using quad combination road trains.
From Leonora it would be railed to Esperance, stockpiled in existing storage sheds and loaded onto bulk carriers bound for China.
APC disclosing plans to export via Esperance comes as freight rail network operator Arc Infrastructure, train operator Aurizon and port operator Southern Ports struggle to come to terms with the business loss and staffing level impacts of 24 years of iron ore haulage and ship loading ending next month.
American iron ore miner Cleveland-Cliffs announced at the start of the year it was shutting its Koolyanobbing, Windarling and Mount Jackson mines and crushing and blending plant at Koolyanobbing, north of Southern Cross on the standard gauge interstate rail line.
Cleveland-Cliffs said discounted prices in China for low-grade Yilgarn ore made the Koolyanobbing operation unprofitable.
In March it notified Southern Ports and Arc the last shipment of ore would be at the end of June.
Last financial year 11.2 million tonnes of iron ore from Koolyanobbing was rail freighted to Esperance and exported, comprising 72 per cent of the port’s total combined import and export trade of 15.5mt, according to Southern Ports’ annual report.
Apart from ore trains currently, the only other regular rail traffic between Esperance and Kalgoorlie is six fuel trains a week – three going up loaded and returning empty.
There is also little traffic on the Kalgoorlie-Leonora line, most of it related to Nickel West’s mining operations at Mt Keith and Leinster.
While a recently improved nickel price has boosted long-term mining prospects, BHP’s announcement last August it intended disposing of its Nickel West assets caused some concern about the future of the line.
APC executive chairman Matt Shackleton last week acknowledged the end of Cleveland-Cliffs’ iron ore rail haul and export through Esperance “presented a wonderful opportunity” for APC to negotiate favourable terms on freight and port contracts for its fertiliser project.
“We have had preliminary discussions with Southern Ports and with the Leonora Shire Council and they were both very encouraging,” Mr Shackleton said.
The shire council was keen to see more diversified use of the rail line to Kalgoorlie, he said.
Mr Shackleton said access to ample storage at Esperance port to stockpile SoP for shipment was also a big factor in the company’s decision.
Railing SoP to Fremantle would require the product to be handled three times – loaded at Leonora, transferred at Forrestfield freight terminal and offloaded at Fremantle.
Pilbara mining had demonstrated rail was the best option to shift bulk commodities long distance, so road transport from Lake Wells to Esperance was a less attractive alternative, he said.
“The logistics study looked at and assessed all alternatives and there was one very clear winner,” Mr Shackleton said.
He said APC had not yet met directly with Arc to discuss rail freight rates, but had been talking to contractor Qube Holdings.
Qube is already contracted by Galaxy Resources to move spodumene – a mineral of increasing importance as a source of lithium – from the Mt Cattlin mine near Ravensthorpe to and through Esperance port.
Qube has invested in rotating container technology – basically a giant crane which lifts, tips and empties a topless shipping container into ship holds – at Esperance port.
The material is loaded inside storage sheds at the port into topless containers which are cycled outside to the rotator and back empty into the shed, providing much improved dust control.
According to Southern Ports’ annual report, last financial year Qube used its rotating container technology at Esperance to load for export more than 54,000t of spodumene from the Mt Cattlin mine and 11,500t of copper and nickel concentrates from Independence Group’s Nova mine 160km east of Norseman near Fraser Range station.
Both Mt Cattlin and Nova mines have shorter projected life spans than APC’s SoP project.
Mr Shackleton said the first pre-production trial producing SoP from harvest salts collected in APC’s trial evaporation ponds built on Lake Wells and fed with brine from a bore field on the lake, was about to begin.
“We anticipate progressing to sulphate of potash production from the harvested salts over the next few weeks,” he said.
“Our Canadian-based process engineers Novopro, experts in the production of solar salts, will have personnel at the production facility to supervise this first run of Lake Wells SoP.”
Mr Shackleton said the first harvest salt samples from the evaporation ponds would be transported to Perth for processing to SoP in a trial of the process to be scaled up and used later on site at Lake Wells.
He said previous SoP samples from Lake Wells brine had been produced in laboratories to prove the process.
While Australian farmers would benefit from a locally-produced, low salt index SoP fertiliser – it is not currently produced here with about 40,000t imported annually, but usage could grow to about 70,000tpa with a lower-price local product – the Lake Wells project’s viability depended on exports, Mr Shackleton said.
Economies of scale meant the project was only feasible with the bulk of production going overseas.
As previously reported in Farm Weekly, APC has signed memorandums with two of China’s major fertiliser suppliers and distributors.
Trade samples produced by the pre-production trial conversion of Lake Wells harvest salts to SoP will be used to further discussions with them.
Meetings aimed at converting memorandums of understand into off-take agreements are expected to be held during the current or next quarter.
China is both the biggest producer and user of SoP fertiliser, but only some of its supplies come from the relatively benign conversion of solar evaporated salts.
The shortfall is overcome by a chemical process reacting Potassium Chloride with sulphuric acid and heating to between 600 and 700 degrees Centigrade in what is known as the Mannheim process.
But an unfortunate byproduct of this process is copious quantities of hydrochloric acid.
Mr Shackleton said tightening environmental laws in China were making it increasingly difficult for fertiliser producers to continue using the Mannheim process.
He said they were looking for alternative sources of solar evaporated SoP to meet a growing demand, which provided a ready export market for APC.
At a price of A$795 a tonne – equivalent a global SoP price of US$601/t – the Lake Wells project is expected to generate life-of-mine annual operating pre-tax cashflows of A$118m/US$81m.
SoP sells for about $950/t bulk in Australia, but can sell for $5.28 a kilogram or more as domestic vegetable garden and fruit tree fertiliser.
APC and its nearest competitor Kalium Lakes Ltd, which is proposing to produce SoP from brine pumped from beneath a chain of salt lakes 160km south east of Newman and exported via Geraldton port, are the front runners in local SoP production.
They are among five Perth based companies at various stages of developing projects at remote salt lakes scattered across the Little Sandy, Great Sandy and Gibson deserts and the eastern and northern Goldfields regions of WA.