Potash West develops Australia’s first potash mine
The global potential of emerging Western Australian potash explorer Potash West (ASX:PWN) can’t be appreciated without learning what Potash is.
Potash – a generic term for salts of potassium used in fertilisers in the form of potassium chloride, potassium sulphate, or potassium nitrate.
Three essential fertiliser elements are needed in amounts of hundreds of kilograms of per hectare world-wide to yield good plant growth.
These are nitrogen (N), phosphorous (P) and potassium (K); together they constitute the NPK stamped on bags of fertiliser bought from garden centres every weekend.
They are not interchangeable and depending whether it is roses growing in Grandma’s garden, wheat in the fields of Western Australia or bananas in northern Queensland, the correct amount of each is vital to the cause.
The major force currently driving potash demand is world population, which between now and 2050 is predicted to grow from the current count of seven billion people to around nine billion.
At the same time the arable land quota per person will decrease from around 0.25 hectares to around 0.15 hectare per person.
This mix includes the increasing middle class in major population centres, such as India and China, all demanding higher quality foods.
Needless to say there will be a great strain on global food supplies.
The astounding statistic to emerge from all of this is that Australia doesn’t boast a domestic supply of potash.
“The world market place for potash is dominated by Canada, which produces around 45 per cent of world production, followed by Russia, Belarus and Germany,” Potash West managing director Patrick McManus told The Inside Story.
“Those four countries are responsible for 80 per cent of world potash production.
“Major global consumers of potash are India and China, accounting for just on 50 per cent of the world’s export business.
“Australia and India both have no domestic source of potash at all. All of the potash used in Australian agriculture is imported – the majority of this is from Canada.”
Potash West listed on the ASX in May following a successful and oversubscribed IPO raising $6 million.
The company has a major land holding over one of the world’s largest known potassium-rich glauconite deposits, the Dandaragan Trough situated in the Perth Basin of Western Australia.
Here it aims to define a substantial resource base and develop new technology enabling it to recover potash.
Potash West’s exploration licenses and applications cover an area of 2,900 square kilometres, a healthy amount of which has been subjected to historic exploration that has indicated glauconitic sediments are widespread along more than 200 kilometres of strike and at least 15 kilometres wide.
“We have an extensive landholding in a great area,” McManus said.
Glauconite is a potassium rich mineral that has been recognised as a potential source of potassium for many years.
In the Dandaragan trough it was deposited with quartz, producing distinctive greensand deposits characterised by high contents of iron and potassium.
In the 1960’s the Dandaragan Trough caught the attention of the West Australian government, which thought it may possibly host a number of greensand occurrences.
A wide-spread drilling operation was undertaken to evaluate the stratigraphic setting in which glauconite accumulated.
This campaign demonstrated the Dandaragan greensand beds to have a thickness of up to 200 metres in some areas, and to be present within most areas of the basin.
The units are flat lying, located on or near the surface and amenable to low cost open pit extraction in a similar style to mineral sands mining.
Potash West is focusing on two geological units of greensands identified by this historic exploration it considers may hold potential economic deposits.
These are the Molecap Greensand and the Poison Hill Greensand, both of which are widespread in the Basin.
“We have done some very detailed mapping looking at the Dandaragan Basin, which was a shallow sea 60 million years ago, when the glauconite was deposited,” Macmanus said.
“The mapping shows areas of general uplift, where the thicker Poison Hill greensands sequence is likely to be preserved.
“The company’s theory is the higher ground within our tenements hosts both greensand units and that is where we are concentrating.”
Molecap Hill located 1.4km south of Gingin was mined between 1932 and 1962 for 35,000 tonnes of greensand producing 6,510 tonnes of glauconite for use as a water softening agent.
It is not a target now however, as the upper Poison Hill sequence has been eroded away in this area.
“Where the tenement ground is higher, there will be less erosion and should therefore host the two units of greensand,” McManus said.
“Although there is a huge area there, and we are likely to be sitting on billions of tonnes of mineralisation, the challenge is to find fresh material close to surface.
“Greenstone weathers rapidly at surface, which is why you rarely see any fresh material.”
Although the 1960’s drilling was positive the price for potash was heading in the other direction so downstream processing of glauconite to yield potash was not pursued.
As time has marched on so have advances in technology and Potash West is now leading the parade as its works on developing its own potassium extraction and processing procedure.
Company director Gary Johnson has a well-documented background in hydrometallurgy.
He has previously developed a number of processes currently in use around the world for hydrometallurgical extraction of various metals.
Johnson and his team at Strategic Metallurgy are now working on the process development side of the Dandaragan Trough project.
A 2,000 kilogram bulk sample taken from the Poison Hill greensand sequence was subjected to extensive testing, evaluating a wide range of conditions and reagent regimes.
So far over 200 leaching tests have been conducted using a range of reagents and temperatures.
The company has been encouraged by the results to date, which have demonstrated potassium dissolution is achievable from the Dandaragan glauconite without resorting to extreme leaching conditions.
“When we have the process reasonably well understood is when we will be able to commence evaluating how much it will actually cost to produce a commercial-grade potassium sulphate product,” McManus explained.
The technical developments offer Potash West the opportunity to become a world leader in the field of potassium extraction.
“The fact there are a number of glauconite deposits around the world leads us to believe the technology we are developing may well become a valuable commodity in itself,” McManus explained.
“We are mindful of that, and because of that we won’t be disclosing all the processing steps we develop, basically in order to protect our intellectual property.”
The vital element to the Potash West story however, is the current situation where Australia imports all its potash fertilizer.
“Certainly, if you talk to farmers, which we have done, they feel they currently don’t use enough potash,” McManus said.
“the reason for this is simply because of the costs involved.
“By the time it reaches the farm gate it costs substantially more than when it leaves Vancouver at $500 per tonne.
“It arrives in a bag under the noses of a lot of people as an imported product – we don’t have any potash mines in Australia…at the moment.”
Potash West (ASX:PWN)
…The Short Story
HEAD OFFICE
Suite 3
23 Belgravia Street
Belmont WA 6104
Ph: +61 8 9479 5386
Fax: +61 8 9475 0847
Web: www.potashwest.com.au
Email: info@potashwest.com.au
DIRECTORS
Adrian Griffin, Patrick McManus, George Sakalidis, Gary Johnson
MAJOR SHAREHOLDERS
Elsinore Energy 16.70%
Siak Poh Yeo 2.40 %
Patrick McManus 2.30 %
Miew Leng Lee 2.00 %
Goon Eng Chua 2.00 %
SHARES ON ISSUE
43.6 MILLION
MARKET CAPITALISATION
$9.8 MILLION (at 17 November 2011)