Post on 28-Aug-2018
Potash Basics
Mark ArundellIMEx Consulting
All data in this presentation are the intellectual property of IMEx Consulting (except where obtained from public domain) and must not be reproduced, copied, shared or forwarded in any form without the express permission of IMEx Consulting
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Potash
What is Potash?What is it used for & why its important Supply demand metricsCurrent operations globallyKnown projects coming on streamKey Project metricswhat grade is good/bad, capex etc
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The IMEx Group - ExperienceExploration Projects and Regional Studies
Congo
Danakil
Nagaur (India & Pakistan)Carlsbad
MichiganElk Point BasinParadox Basin
Neuquen
Udon Thani
CanningCarnarvon Adavale
Oman
Afghanistan
Sicily
Khemiset
North CaspianCatalonia
Maritimes
Atacama
Sergipe
ZechsteinBelarus
Uralian
IMEx Office
AmazonGabon
Timaru
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Lake Auld
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What’s Potash?
The mineral (K) is one of the three main macro nutrients required by plants, along with nitrogen (N) & phosphate (P)
Potash helps improve a plant's disease resistance crop quality increases yields
Only potassium fertilizer source No practical substitutes
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Why Potash? Potash Corp
2008 US$4.9Billion
Jul 15US$29.18
2010 : BHP
US$43.33
2011 US$2.7Billion 2011 9.3 MMT2013 US$2.8 Billion 2013 7.8 MMT
18.1 MMT
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$US
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Supply Demand Metrics
DemandGlobal DevelopmentRising income better diets; demand for
high quality fruit, vegetables & meatIncrease productionFertiliser has a key role
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PCS 2014
Supply Demand Metrics
Shift to Urban in Dev countries+80M people per year
Asia & Africa2014 : ½; 2050 : 2/3
Econ Grow, inc FoodFruit, veg + protein
Brazil, China, Indo - nowIndia, Africa - begin
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PCS 2014
Supply Demand Metrics
Pressure to inc. prod on existing landLess arable land
Fertiliser essential to crop yieldYield growth
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PCS 2014
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PCS offer for K+S
BHP poison pill? Gain control over undisciplined tonnes Regulators will prevent Volume over price is inevitable
Market : K&S Brazil PCS – New Brunswick (non Canpotex) Brazil
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ScotiaBank 2015
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PCS offer for K+S
Largest export marketBrazil USA China India
An aside…. Producers are “Industrials” on NYSE not “Miners”PCS, IPI, MOSDividend Yield
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Supply
Only 12 countries produce potash. Canada, Russia, Belarus & Germany - +75%
Seven companies control >80% of global supply: Potash Corp of Saskatchewan, Mosaic Co, Agrium Inc,
K+S, Uralkali, Belaruskali & Israel ChemicalsTwo marketing conglomerates did control >68%
exports. Canpotex - Potash Corp, Mosaic and AgriumBelarussian Potash Co - Uralkali and Belaruskali.
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Potash Mining
Solar : Dead Sea, Utah, ChinaUnderground : Conventional & SolutionConventional : Room & Pillar <1200m Saskatoon, SK, Canada
Solution: 300 - ~2,000m Regina, SK, Canada
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Southern SaskatchewanPotash Mines & Depth to Potash
Solution
ConventionalSaskatoon
Regina
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Conventional Mining
Depth : 300m - 1200mThick Salt : 120m - >150mRoom & Pillar - 5-12m high; 10-20m wide; 70% recovery (30% pillar)Drill & Blast, road headers or continuous miners Salt : 30cm bottom; 1-2m roof Prairie EvaporiteStrong impermeable rock 10-15m aboveNot shale, sand, etc.
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Solution Mining
Steam or Hot water injectedSalt saturate inc. Potash recovery Single well (concentric casing)150-1500m deep (Barradeel, NL : 2800m)One well - 100,000 tonnes
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Solution Mining
Major costEvaporation Pondsplastic liner
Drying Kilns - CanadaProduction Sol : 4.5Mt, Belle Plaine, SK (Mosaic)Con : 3.0Mt, Colonsay, SK (Mosaic)
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Belle Plaine - Mosaic
Cluster House
Salt Tailings
Plant – Crystalliser, Compactor
Cooling Ponds
3 km
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Known New Projects
2015 : Prod 60Mt; Capacity 70MtCommitted new projects +10MtEurochem (Russia) – 4.6-8.3Mt Rocanville (NA) – 3.0Mt (2015)Legacy (NA) – 2.0Mt (2017); 2.9Mt (2023)Esterhazy K3 (NA) – 1.0Mt (2017); +$1.7B
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Known New Projects
Potential new projects ~20MtBHP : Jansen (NA) 8-10MtSirius : York (E) 2.0-5.0Mt PHAm Potash : Holbrook (NA) – 2.5MtROC (A) Elemental 0.4-1.2Mt; MagInd – 1.2MtVale : Carnalita (SA) 0.5-1.7MtHFR : Muga (E) 1.1Mt ICL/Allana : Ethiopia (A) 1.0MtSBM : Eritrea (A) 0.4Mt; SO4
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Key Project Metrics
MarketMineralisation inc. GradeCapexOpex“Realised price”
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Key Project Metrics
“Success in potash is about Capex & Margin (not grade & scale)”MarketPotash is an industrial mineralWhere are the buyers? Contracts not spotTransport can be a killer SK : US$50-60/ton AU : US$80/ton
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Key Project Metrics
MineralisationGrade, Product, Depth, InsolublesMining method Resource recoveryK2SO4 > KCl
CrystallisationDrying Kilns - CanadaEvaporation Ponds Intrepid : solar >$110 less than conventional
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US$ Dom
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Key Metrics - Minerals
• Mineral Formula % K2OSylvite KCl 63Carnallite MgCl2.KCl.6H2O 17Kainite MgSO4.KCl.3H2O 19“Sylvinite” KCl.NaCl ~20
Polyhalite 2CaSO4.K2SO4.MgSO4.2H2O 16Langbeinite MgSO4.K2SO4 23Anhydrite CaSO4 0
Chlo
rides
Sulp
hate
s
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Key Project Metrics
CapexWhy spend US$4B?Mine life - +50 yrsOld mines dying –
K+S
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PCS, K+S
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Summary
Potash is necessary to increased crop production – no practical substitutePotash is an industrial not a metalMarket is the important key metricSupply/demand balance – excess supply The old way is dying – volume will
overtake price control
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