Categories: General Market Commentary
Topics: General Market Commentary

Junior potash companies adapt to lower prices

Houston, 16 May (Argus) — North America's junior potash companies have changed strategies to become viable producers amid a challenging global potash market that has seen MOP prices fall and existing producers cut production.

Numerous MOP and SOP projects were announced after prices peaked in the $800s/t fob Vancouver in 2008, and established producers have since completed brownfield expansions. But only one greenfield North American mine has come to fruition over that span as prices have fallen by about $600/t: K+S' newly-dubbed Bethune site in Saskatchewan, a 2mn t/yr MOP solution mine that began operations this month.

Even that project required an established producer--Germany-based K+S--acquiring a project owned by a junior mining company, Potash One. Independent junior miners have a faced an uphill battle, with some canceling projects altogether.

Remaining prospective potash producers have shifted their focus amid the downturn in prices. Some have opted to pursue specialty products and niche markets. Others have scaled down mine projects to lower capital expenses. And some have secured supply agreements with major offshore importers prior to having begun any construction.

Potash Ridge goes regional

Potash Ridge is poised to become the first new potash company to reach production in North America, but on a smaller scale. Its 40,000 t/yr Valleyfield SOP project in Quebec, which it bought in 2015, is expected to break ground by the end of 2017. Operations are slated to start in mid-2018, six years after the company's initial public offering.

Valleyfield will produce SOP using the Mannheim process, which reacts MOP with sulfuric acid and produces byproduct hydrochloric acid. The company has secured an offtake for the hydrochloric acid and a supply deal for sulfuric acid.

If realized, Potash Ridge would become the second North American SOP producer, joining Compass Minerals.

Potash Ridge chief operating officer Ross Phillips told Argus that the company intends to market production from Valleyfield to the east coast of North America. The company's goal is to provide SOP to growers whose production schedule is out of sync with Compass Minerals' solar harvesting schedule in Utah, Phillips said.

Potash Ridge is in "advance discussions" for securing offtake and financing agreements by the end of the second quarter of 2017, according to Phillips.

Meanwhile, Potash Ridge's original, larger Blawn Mountain SOP mine project in Utah remains in a developmental stage.

The company has reduced the projects estimated SOP production capacity from 580,000 t/yr to 255,000 t/yr and will consider expanding operations at its proposed Utah mine to include alumina production.

Click here to continue reading...