TWO companies planning to produce Sulphate of Potash (SoP) fertiliser from remote WA salt lake brine by 2020 are joining forces to potentially slash development costs.
Australian Potash Ltd and Salt Lake Potash Ltd – identified by their Australian Securities Exchange (ASX) codes as APC and SO4 – announced Friday they had signed a “co-operation agreement”.
Under the agreement they will investigate establishing common infrastructure for individual SoP projects, as well as the possibility of jointly developing and sharing some production facilities.
A joint study of the merits of shared-cost common infrastructure will be conducted by independent engineers.
Both companies have adjacent tenements at Lake Wells, an extensive salt lake 200 kilometres north east of Laverton, with SO4’s interest covering the northern half of the lake and APC’s the south-eastern half.
In near identical projects within similar time frames, both companies plan to extract potassium-rich brine from the same paleochannel – ancient river bed – beneath the lake, evaporate off water to concentrate harvest salts in a system of shallow solar ponds and process the salts into a bulk commercial fertiliser product on site.
Both are looking at producing a premium fertiliser with minimum 52 per cent potassium oxide content and less than 1pc chloride.
Both are also looking at using road trains to cart bulk fertiliser to a railhead at either Malcolm – 280 kilometres away – or Leonora – 300 kilometres – and then by rail to Esperance port for export to meet growing international demand, particularly from China where tightening environmental laws have restricted SoP production by an alternative chemical process.
Most obvious difference between the two projects is APC plans to use a bore field to extract brine–- it has established five of the proposed 35 production bores it will need – while SO4 plans to use trenches across the lake surface to accumulate brine for pumping into evaporation ponds.
Earlier this month APC was granted three mining leases along the paleochannel it has identified as more than 55 kilometres long, more than 174 metres deep and four kilometres wide beneath its leases and SO4 was granted the one mining lease it applied for.
The APC leases cover the area proposed for stage one SoP production of 150,000 tonnes per annum from early 2020 and stage two of up to 300,000tpa.
APC is within weeks of producing its first local SoP samples from salts harvested at it Lake Wells trial pondage system.
As previously reported in Farm Weekly, APC plans to produce 250 kilograms of SoP trade samples as part of an initial two-tonne production run at a processing facility established in Perth in conjunction with the Australian arm of French global testing, inspection and certification services organisation Bureau Veritas.
APC was in discussions last week with its processing consultant, Canadian project development and management company Novopro, over the arrival of its lead process engineer who will manage the first production run of SoP.
SO4 previously planned to build a “demonstration plant” to produce its first product samples at Lake Wells – its Northern Goldfields SoP project covers eight salt lakes being assessed for brine suitability to produce fertiliser.
But in order to fast track the project, in March it signed a memorandum of understanding with Wiluna gold miner Blackham Resources at Lake Way, a salt lake south of Wiluna and switched its “demonstration plant” plan to there.
Blackham’s Matilda-Wiluna mining leases cover 64 square kilometres at the north end of Lake Way around a former open cut gold mine known as Williamson Pit.
SO4 holds adjacent tenements covering 290km2 over a paleochannel beneath the lake.
Since the Williamson pit last operated in 2006 it has filled with hypersaline brine from the paleochannel.
SO4 now intends to build its 50,000tpa $49 million demonstration plant and evaporation ponds on Blackham’s leases at Lake Way and pump an estimated 1.2 gigalitres of brine from the Williamson Pit as “starter feed” for its ponds.
Blackham intends resuming mining at the pit next year and will have it dewatered by SO4, while SO4 will have a ready supply of brine for its trial plant while it develops a network of surface accumulation trenches.
Building on existing mining leases will minimise bureaucratic delays.
SO4 plans to produce its first harvest salts at Lake Way next year and its first SoP fertiliser there in 2020.
But production will eventually shift back to Lake Wells and development there will continue towards producing a projected 200,000tpa, ramping up to 400,000tpa of SoP fertiliser, according to SO4 chief executive officer Matthew Syme.
“They are bulk projects with big capex (capital expenditure) requirements to get them up and running,” Mr Syme said.
“It’s quite obvious that with the projects being so similar in nature and located in the same area there is potential for big advantages in shared common costs.”
APC managing director and chief executive officer Matt Shackleton said significant initial savings seemed possible through developing common infrastructure such as a heavy haulage access road to Lake Wells, electricity generation, water treatment and waste disposal serving individual mine camps or perhaps even a common mine camp.
Mr Shackleton said there was also potential for savings through integrated road transport, freight rail and other service contracts.
He said ultimately the potential to share production facilities such as evaporation ponds could be explored under the co-operation agreement.
“Logistics is basically one third of our costs and we believe substantial savings are possible,” Mr Shackleton said.
“We will each continue independently with our own projects while a study into jointly developing common aspects is carried out and there will be no delays to projected time frames.”
In statements to the ASX both companies said they “anticipate substantial potential capex and opex (operating expenditure) benefits from some level of infrastructure sharing, with further potential benefits arising from shared or common evaporation and salt processing facilities”.
“There is compelling logic in pursuing the economies of scale inherent in a larger shared solution as well as sharing the capital costs for road upgrades, haulage equipment and other transport and handling facilities,” they said.
A third company planning to produce SoP fertiliser from remote salt lake brine by 2020, Kalium Lakes Ltd (ASX code KLL), last week announced the Northern Australia Infrastructure Fund (NAIF) was prepared to consider debt funding for its Beyondie SoP project.
KLL’s Beyondie project is based on a string of salt lakes north west of Wiluna and at this stage, is slightly ahead of the APC and SO4 projects in development.
A Federal government initiative, NAIF provides access to up to $5 billion of finance, which may be on concessional terms, to support infrastructure development that generates public benefit for northern Australia.
It aims to encourage and complement private sector investment.
NAIF funding would allow KLL to bring forward construction of a $29 million, 78km gas pipeline to connect to the Goldfields gas pipeline resulting in an operating cost reduction of about $30-33 per tonne of SoP.
The infrastructure package could potentially also include upgrades to the access road out to the Great Northern Highway, gas-fired power generators, new communication infrastructure and an airstrip at the site 160km south east of Newman.
KLL is proposing a ramped start-up, initially producing 75,000tpa of SoP fertiliser but building to 150,000tpa and exporting via Geraldton port.
It estimates target export markets in China, the United States, India, Japan, New Zealand, Indonesia, Malaysia, Thailand and Vietnam could total almost 4.9 million tonnes a year.
Australia imports about 40,000tpa of SoP but its usage could increase to about 75,000t if it can be produced locally at a cost low enough to encourage its use in broadacre cropping, particularly in salt-affected areas.
The world SoP market is estimated at 6m tonnes a year – 10pc of the global potash fertiliser market and growing.
