Data points
- source for potash in this story: Arizona, near Holbrook AZ;
- seller: Prospect Global Resources, Inc (US)
- buyer: Sichuan Chemical Industry Holding Co (China)
- to buy: 500,000 metric tons annually over 10 years staring in 2015; agreement
- to date, Prospect has spent $75 million of the roughly $1 billion it will need to develop its property
- bigger challenges: company yet to secure government permits; needs to raise millions of dollars
- US exported 215,000 metric tons of potash in 2011
- Arizona may hold as much as 2.5 billion tons of potash
Folks might recall:
- The drive for potash, as a fertilizer, is being driven by the Chinese
- A small portion of North Dakota sits on 33% of all the known potash reserves in the world
- It is the same basin that allows Saskatchewan to produce 90% of all potash produced in North America
- Officials estimate there are 7 billion tons of potash in northwestern North Dakota and northeastern Montana; others suggest as much as 60 billion tons
- Dakota Salts LLC, a subsidiary of Sirius Minerals, London, England, got the first permit in decades to drill for potash in North Dakota
From Geo News, January, 2011:
While Anderson and Swinehart (1979) placed
the resource at 60 billion tons (50 billion in North Dakota and 10
billion tons in Montana) the U.S. Geological Survey estimates the
total U.S. potash resource at roughly 7 billion metric tons, with
the majority of that occuring in northwestern North Dakota and
northeastern Montana (Jasinski, 2010a).
The problem with Potash in ND is the depth. Too deep to be conventionally underground mined. Solution mining is the only option but it would be costly because of the extraordinary capital costs involved as well as operating costs involved with taking the salt out of solution as soon as it gets to the surface.
ReplyDeleteI've always been concerned about the drying process....not sure if good for North Dakota....don't know enough about the entire industry. In big scheme of things, I suppose I'm not a fan of potash mining in North Dakota, but don't know enough to really say one way or the other.
DeleteBut the capital costs certainly explain why Sirius Minerals has backed out.
What impresses me is the amount of potash the Chinese will be buying in the not-too-distant future. For me, that's the big story.
Thank you for taking time to comment; helps me understand the issues.