A SECOND WA company racing to be first to produce Sulphate of Potash (SoP) fertiliser from remote salt lake brine has signed up a potential export customer.
Kalium Lakes Ltd, founded by Pilbara pastoralist and Newman earthmoving and helicopter mustering entrepreneur Brent Smoothy, announced on Friday it had signed a non-binding agreement with a German fertiliser company to take SoP fertiliser from its Beyondie project in the Little Sandy Desert.
The off-take memorandum of understanding (MoU) is with Hamburg-based Wittraco Düngmittel GmbH, a global marketer and distributor of commodity, soluble and specialty fertilisers.
Its network sells by vessel, barge or road, in bulk or container, and offers shipping, financing, insurance, forwarding and warehousing services.
The MoU proposes Wittraco will buy about 20 per cent of production – believed to be between 20,000 and 30,000 tonnes a year – for the first five years of production of the project, which is based on a chain of salt lakes 160 kilometres south east of Newman.
Kalium Lakes told the Australian Securities Exchange (ASX) the German company intended to “support the development” of the Beyondie project and, subject to future discussions, both parties would seek to convert the MoU to a binding sales contract.
“To have established a solid relationship with an organisation of Wittraco’s global standing reinforces our belief in the value and significance of the project,” said Kalium Lakes’ managing director Brett Hazelden.
“Strong international sales partners, that complement our future Australian supply and distribution focus, will provide the solid foundation needed for the successful development of this important project,” Mr Hazelden said.
Earlier last month Kalium Lakes announced it was building “large scale pilot evaporation ponds” at Beyondie to harvest production salts.
Its plan is to supply the local SoP market and export the remainder of its production via Geraldton port.
Australia imports 30,000-40,000t of SoP per annum and it sells for between $900 and $1000 a tonne.
The global SoP market is estimated at seven million tonnes per annum with annual growth of 5pc.
Only three other countries are major producers of SoP from brine – China, the United States and Chile.
Last month one of Kalium Lakes’ four Perth-based competitors, Australian Potash Ltd, announced it had signed two non-binding MoUs to supply SoP fertiliser from its Lake Wells project 189 kilometres north-east of Laverton, to Chinese agriculture and fertiliser companies.
One MoU is with Hubei Agricultural Means of Production Group Co Ltd for sales of up to 100,000t/a of SoP from Lake Wells.
The other is with Sino-Agri Holdings Company Limited, one of China’s major fertiliser companies, to take up to 100,000t/a or about 30pc of Australian Potash’s estimated production from stage two of its project.
Last week Australian Potash announced it had increased its holding at Lake Wells and access to more brine with acquisition of three tenements, next to its own, from AngloGold Ashanti Australia Ltd (AGAA).
Australian Potash did not disclose the price it paid for the tenements but in ASX documents said it paid a $300,000 “consideration” for the transfer of tenements.
It said it had paid $150,000 on settlement and the balance of the consideration was due on August 31.
On Friday AGAA revealed the probable reason it relinquished the tenements, it has signed a $31m agreement to upgrade processing facilities at its Sunrise Dam gold mine south of Laverton with work to begin immediately.
Executive chairman Matt Shackleton said Australian Potash’s acquisition of the tenements could increase the proposed 20-year life of its SoP project and provide extra flexibility in where it located evaporation ponds.
“(Our) scoping study generated a strong financial model based largely on developing the western high-grade zone (at Lake Wells),” Mr Shackleton said.
“This acquisition was opportunistic, but with this additional ground we believe we can optimise the model to include nearby brine supply and pond development areas,” he said.
“Our hydrogeological consultants are working towards an exploration target on the ground, with our field team already planning seismic surveys and drilling programs.”
The company was working towards commissioning pilot evaporation ponds and starting a stage two test pumping program in the third quarter, he said.
As previously reported, Australian Potash will have a stand at the Dowerin GWN7 Machinery Field Days at the end of next month if farmers want to find out more about its project to produce a local SoP fertiliser.
Australian Potash’s Lake Wells SoP competitor, Salt Lake Potash, has told the ASX it successfully completed the second tranche of its London and Australian share placements to raise $17.63m capital.
It plans to build a “proof of concept” pilot processing plant at Lake Wells, with first salts expected to be harvested next year.