Chapter 1 Proceedings of the 48Th Annual Forum on the Geology of Industrial Minerals Scottsdale, Arizona | April 30 - May 4, 2012

Proceedings of the 48th Annual Forum on the Geology of Industrial Minerals Scottsdale, Arizona | April 30 - May 4, 2012

World Potash Developments Mark D. Cocker & Greta J. Orris

Arizona Geological Survey Special Paper 9 Chapter 1 Proceedings of the 48th Annual Forum on the Geology of Industrial Minerals Scottsdale, Arizona | April 30 - May 4, 2012

Arizona Geological Survey M. Lee Allison, State Geologist and Director

For information on the mission, objectives or geologic products of the Arizona Geological Survey visit www.azgs.az.gov.

This publication was prepared by an agency of the State of Arizona. The State of Arizona, or any agency thereof, or any of their employees, makes no warranty, expressed or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed in this report. Any use of trade, product, or firm names in this publication is for descriptive purposes only and does not imply endorsement by the State of Arizona.

Special Paper 9

Suggested Citation: Cocker, M.D. and Orris, G.J., 2013, World Potash Developments, in, Conway, F.M., ed., Proceedings of the 48th Annual Forum on the Geology of Industrial Minerals, Phoenix, Arizona, April 30 - May 4, 2012. Arizona Geological Survey Special Paper #9, Chapter 1, p. 1-16. FOREWORD

The 48th Forum on the Geology of Industrial Minerals was held in Scottsdale, Arizona, April 30 - May 4, 2012. From across the U.S., Canada, UK, and Jamaica, more than 80 people attended. This was the Forum’s second appearance in Arizona; the first being the April 9 – 12, 1985, meeting in Tucson. The earlier Forum celebrated the University of Arizona’s centennial. This 48th Forum coincided with celebration of the State of Arizona’s centennial. The Forum on the Geology of Industrial Minerals has been held annually since its inception by the late Professor Robert Bates of Ohio State University nearly 50 years ago.

The 48th FGIM was organized by the Arizona Geological Survey with support from the Arizona Geological Society, Clear Creek Associates, Golder Associates, National Exploration Wells & Pumps, the SME Dryer Fund, Arizona Rock Products Association, Arizona Mining Association, and the Arizona Section of the American Institute of Professional Geologists. Field trips were planned and moderated by the late Doug Shakel and included visits and guest lectures on the Colorado Plateau and Mogollon Rim, the minerals and geology of Eastern Arizona, and Phoenix area industrial mineral sites. Special thanks to: John Bezy for his remarks on Sedona; Paul Lindbergh for cogent discussions of Jerome; Brian Langford for his description of Phoenix Cement; the Jerome State Historic Park rangers for their historical overview; David Pelletier for his remarks at Drake Cement; Ted Eyde’s for his comments at Lyle Hectorite Pit; Melissa Hadley’s overview of Morton Salt; Dan McQuade and Kyle Henderson for guiding us through the Salt River Materials Group Beeline Plant; to Evvy Otis for remarks on Imerys Perlite; and Bob Foster for discussing the Feldman Quarry.

We were fortunate to have Drew Meyer, President of the Society for Mining, Metallurgy, and Exploration (SME), as keynote speaker. His thought-provoking presentation set the tone for dynamic discourse throughout the Forum. The wide variety of papers presented fell into the following categories: Carbonates, Potash, Sandstones & Aggregates, Rare Earth Elements, Education & Outreach, Miscellaneous, and Arizona Geology. Papers from the Forum are posted following light editing for general clarity and standardization of bibliographies.

Thank you to all participants, writers, sponsors, field trip coordinators and guides, the Scottsdale Cottonwoods Resort, and AZGS staff for making the 48th Annual Forum a smashing success.

M. Lee Allison Director, Arizona Geological Survey Tucson, Arizona

World Potash Developments Table of Contents

Abstract 2 Introduction 2 Developments in Potash 3 Production and Exploration 3 Loss of Production 4 Increased mine production 5 Brownfield mine development 6 Greenfield Development 7 Advantages of Brownfield versus Greenfield Projects 8 Challenges for Greenfield Potash Projects 8 Energy 8 Water 9 Transportation 9 Deep water ports and safe storage facilities 10 Mining, maintenance, geological, engineering and management expertise 10 Production downtime 11 General construction costs and time required 11 Living facilities (30 to 50 + years) 11 Potash mining supply chain 12 Summary 12 References Cited 13

Figures

1. World map of significant potash-bearing marine evaporite basins 4 2. Pie diagram of the world’s largest potash producers 5 3. Expansion of the Allan mine headframe, Saskatchewan, Canada 6

1 World Potash Developments World Potash Developments Mark D. Cocker, Greta J. Orris U.S.Geological Survey, Tucson, Arizona, USA Email: [email protected]

Abstract K+S, several government-owned entities, and many, relatively new, junior companies. While greenfield Potash is a non-renewable resource that is a exploration is valuable in defining new sources key ingredient in fertilizer along with phosphate of potash, brownfield expansion projects cost and nitrogen. Increased demand for fertilizers and considerably less and new production from these potash has driven potash prices from US$96/tonne in projects have ready access to existing infrastructure September 1990, to US$203/tonne in July 2007, to not likely present in greenfield operations. a current US$495/ tonne (April, 2012). A dwindling During the latter part of 2012 potash price supply of arable land worldwide coupled with softening has led to suspension of some of the population growth requires increased food production greenfield projects and production shutdowns. A price from that land. Potash helps improve crop yields and turnaround in early 2013 has strengthened the potash enhances flavour, color and texture to crops used as industry which is now looking at an upturn in prices food or used to feed livestock. Increasing populations through the remainder of the year. together with higher standards of living in developing countries result in increased demand for food and Introduction more protein from meat, as well as more fruits and vegetables. Developing countries like China, Brazil Potash denotes a variety of mined and and India have historically under applied fertilizers, so manufactured salts, all of which contain the element crop yields are low. potassium in water-soluble form (Jasinski, 2011a). Most of the world’s potash production has come Industry uses the term potash to refer to potassium from a relatively small number of mines in the United chloride (KCl), as well as potassium sulfate, nitrate, States, Canada, Germany, France, Belarus, Ukraine, and oxide (K2O) (Neuendorf and others, 2005). The and Russia. As of 2012, the leading companies in principal product, KCl, is referred to as muriate potash production include Potash Corporation of of potash or MOP, but potash grades are generally Saskatchewan (PotashCorp), Uralkali, Mosaic, expressed as K2O. The principal use (95 percent) Belaruskali, Israel Chemicals Ltd. (ICL), K + S, of potash is for fertilizer along with phosphate and Qinghai Salt Lake Potash, Arab Potash Company nitrogen. Potassium is an essential nutrient for plants, (APC), Soc. Quimica y Minera de Chile SA (SQM), animals, and humans with no known substitutes. Agrium, Intrepid, and Vale. Most of the presently Potash helps improve crop yields and adds flavour, active mines were established in the 1960s and 1970s, colour and texture to crops used as food or used to so much of their infrastructures are on the order of 40 feed livestock. to 50 years old. Increased demand for fertilizers and potash in Price increases since 2009 have encouraged the past 5 to 10 years can be related to the fact that mining companies to upgrade production capacity at fertilizer allows larger and more frequent crops to those mines with extensive reserves. Mine expansion be produced. Demand for food has exceeded supply and brownfield exploration (that is adjacent to current causing world grain prices to double from 2007 to mines) is another way to increase potash production 2011 (Brown, 2011: O’Brien, 2007). A doubling of capacity. Greenfield exploration has expanded with the world population to 6.9 billion from 1970 to the new projects in Thailand, Laos, Russia, Kazakhstan, present has required more food production (Brown, Uzbekistan, Belarus, Canada, United States, Eritrea, 2011). Potash-bearing fertilizer allows more crops to Ethiopia, Gabon, Congo, Brazil, and Argentina. be produced per acre, but that increased productivity Companies involved include BHP Billiton, Vale, 2 World Potash Developments is offset by the worldwide supply of arable land turnaround bodes well for those companies expecting dwindling from 0.45 hectares per person in 1961 to to begin production or increase production during the 0.25 hectares per person in 2010 (North American next several years. Potash Developments, 2011). Most of that decrease In 2010, world potash mine production was is related to population growth, although part is about 33 Mt of K2O equivalent. Canada is the largest related to over pumping of irrigation wells and falling producer of potash (9.5 Mt in 2010) among the 13 water tables, especially in India and China, as well as major potash-producing countries, followed by Russia, desertification of arable land and resulting soil loss Belarus, Germany, Israel, Jordon, and China (Jasinski, (Brown, 2011). In addition, the income of people 2011a, b). All of these countries each produced 1 Mt in developing nations is increasing, and people are or more in 2010, and production from other countries improving their diets by adding more protein from was less than 1 Mt each. Most of Canada’s potash meat and more fruits and vegetables (Brown, 2011). production is from the Elk Point Basin (fig. 1). The Global meat consumption has increased from 19 kg Elk Point Basin was estimated to contain 40 percent of per person in 1980 to 40 kg per person in 2010 (North the world’s known potash reserves (Bout and Chiang, American Potash Developments, 2011). Better yield 2008), but recent exploration in this basin and other fertilizers are required for higher quality feed grains basins may change that percentage. for livestock. The world’s potash supply capacity has increased In addition to the need for increased food from 42.7 Mt in 2010 to about 70 Mt in 2011 (Bromby, production, the United States and other countries such 2012; Berube, 2012a). Although demand for potash as Brazil have increased their appetite for ethanol has grown to 45 Mt in 2011, potash production fuel as a substitute for fossil fuels. Corn production capacity has exceeded the increase in demand (Berube, which is a primary source for ethanol has increased 2012b). Additional increased mine production capacity from 16 million tons in 2000 to over 126 million and scheduled opening of new mines may increase the tons in 2010 (Brown, 2011). The widespread drought surplus capacity and result in further weakening of during the summer of 2012 in the United States prices. has severely impacted corn production increasing competition and prices for food, feed for livestock and Developments in Potash ethanol production. Developing countries with large populations like China, Brazil and India, which have Production and Exploration inadequate or no potash resources, have historically under applied fertilizers, so crop yields are low. The Currently, world potash production (97 percent) increased need for fertilizer to meet these needs has is dominated by ten major companies (fig. 2). These the potential to drive up the price for potash. include Uralkali, Potash Corporation (PotashCorp), Potash prices have risen from US $96/tonne in Belaruskali, Mosaic, K+S, China (Qinghai Salt Lake September 1990, to US$203/tonne in July 2007, to Industry Co., Ltd., SDIC Xinjiang Luobupo Potash US$495/tonne in April 2012 (Index Mundi, 2012). In Co., Ltd., and BinDi Salt are variously separated or 2008, a temporary surge in potash prices reached a treated as one in the literature), ICL (Israeli Chemicals Vancouver spot market price of US $1050/tonne. The Limited), APC (Arabian Potash Company), Agrium, Baltic-Black Sea spot market reached a high of US and SQM (Sociedad Quimica y Minera). Some of $1020/tonne in 2008 (Stone, 2010). Prices for potash these production rankings may be more complex than include publically reported spot prices at different the simple rankings of companies by production. global exchange markets and commonly unreported Potash Corp owns significant investments in Sinofert contract prices negotiated between potash suppliers (which owns Qinghai Salt Lake), APC, SQM and ICL. and consumers. In December, 2012, China contracted Uralkali merged with JSC Sylvinit in 2011, and owns with Canpotex to purchase potash at $400/tonne. a portion of Belarus Potash Corporation which owns The market turned around in early 2013, with India part of Belaruskali. purchasing 1 million tonnes (Mt) from Uralkali and Several developments will probably affect world 1.3 Mt from Canpotex at $427/tonne (Bruno, 2013b), production by 2020. These include: although The Economic Times (2013) predicted potash 1) loss of production at older mines (most prices may soften 20 percent in 2013. This price established in the 1960s and 1970s); World Potash Developments 3 2) increased mine production or expansion; ores from Saskatchewan (Barker and Gundiler, 2008). 3) brownfield mine development; and Several mines in the Pripyat Basin in Belarus and the 4) greenfield mine development. Solikamsk Basin in Russia will deplete their reserves during the next decade or so, depending on their Loss of Production production schedules (Foreign Policy Resource Center, 2011; Truscott, 2011b; Uralkali, 2011). There is also the unexpected loss in production Several potash producing basins which were due to mine flooding. In Germany’s part of the important producers in the post WWII era, e.g. Sicily, Zechstein Basin more than 255 potash mines were Carpathian, and Rhine Graben in south and central developed since 1851, and by 1968, 119 of these mines Europe, (fig. 1) have since been either depleted or experienced some degree of water inflow problems. closed due to economic or environmental pressures. Eighty-eight of these mines were closed as a result of The Zechstein Basin extending across much of north

Figure 1. World map of significant potash-bearing marine evaporite basins (shown by red polygons). Location of the Cerrado Verde glauconite deposit is shown by a black square. and central Europe (fig. 1) was once the major source flooding, 27 were rehabilitated after new shafts were of potash from 1868 until production from Canada sunk and only 4 were rehabilitated after the production and the former Soviet Union surpassed it in the late areas flooded (Gimm, 1968; Prugger and Prugger, twentieth century. Mines in the Zechstein Basin 1991; Garrett, 1996). Water inflow has occurred in are facing depletion of reserves within the next 30 many other potash mines. Uralkali’s Bereznicki III years, as well as older, high-cost production (Moore, mine in the Solikamsk Basin in Russia (fig. 1) was lost 2006). Potash mining has been on the decline in due to flooding in 1986 (Bout and Chiang, 2008). In the Salado Basin in south-western United States 2006, Uralkali’s Bereznicki I mine flooded within a 2 (fig. 1) during the latter part of the 1900s (Moore, month period, the mine was abandoned and production 2006). The higher grade potash (sylvinite) has been of about 1.2 Mt/year was lost (Andreichuk and others, essentially mined out and the remaining lower grade 2006; Bout and Chiang, 2008; Uralkali, 2012). The ores (mixed langbeinite, kieserite and sylvinite) are Holle mine in the Lower Congo Basin produced potash more expensive to mine and process than the potash 4 World Potash Developments for only 8 years before it was flooded in 1977 (Rauche principal problems with this option are the costs and Van der Klauw, 2010). Attempts are made to involved in sinking a shaft through aquifers overlying control water inflow by grouting or otherwise sealing the soluble salt and potash and the time required off possible production areas. Continued water inflow for the shaft sinking and underground development. into the Patience Lake mine in the Elk Point Basin in Although current costs for this type of development western Canada (fig. 1) eventually led to its conversion in Saskatchewan are on the order of several billion from an underground mine to a solution mine (Prugger dollars, some companies are using this option. At the and Prugger, 1991). Rocanville mine (Potash Corp) a new access shaft is being sunk 16 kilometers from the production facilities and the present access shaft will be converted to production. This will increase the capacity of

Figure 2. Pie diagram of the world’s largest potash producers.

Increased mine production production from about 1.8 Mt/year to 3.6 Mt/year of MOP (Moore and others, 2011). Total costs for such an expansion are about C$8.2 B and will take Some potash mines have the reserves or resources approximately 7 years (PotashCorp, 2012a; Moore and to increase production. Several options are available to others, 2011). Mosaic is expanding the Esterhazy mine increase production. Because the principal bottleneck complex by adding K3 approximately 9 km from the in production is the production shaft headframe or K1 mine and is scheduled to be completed by 2017 the delivery system up the shaft, one option is to (Bruno, 2012d). sink an additional shaft(s) to substantially increase Another option is to increase the size of the ore the amount of potash hoisted to the surface. The skip so that more ore is hoisted per trip. The diameter

World Potash Developments 5 of the skip is governed by the diameter of the shaft increase potash production capacity. Probably the so only the length of the skip can be increased. This most active area of brownfield exploration has been in requires increasing the height of the headframe to Saskatchewan where the Potash Permit Area contained accommodate the extra length. Modification of the only 11 potash mining leases in 2004. In November, Allan mine (PotashCorp) headframe in December, 2008, exploration activity expanded to include 176 2010 is shown in figure 3 and will help increase the potash exploration permits with 11 permit applications production capacity from about 1.8 Mt/year to 2.7 Mt/ pending (Berenyi and others, 2008). By the end of year of MOP (Moore and others, 2010; PotashCorp, 2009, there were 172 exploration permits, and the 2012b, d). Total costs for such an expansion are number of leases increased to 19 (Stone, 2010). approximately C$550 million and will require At least 3 more leases have been added since the approximately 6 years (Moore and others, 2010; beginning of 2011. PotashCorp, 2012b). In the Elk Point Basin, several mines in the development stage can be considered as brownfield

Figure 3. Expansion of the Allan mine headframe, Saskatchewan, Canada (December, 2010). Brownfield mine development or greenfield projects. K + S’s considers the Legacy project to be a greenfields project (Hopf and others, 2012), but it is essentially adjacent to Mosaic’s Belle Brownfield exploration is conducted within Plaine mine. K+S began development in 2011. K+S geological terrain in close proximity to a known expects to initially produce 1.8 Mt of K O per year ore deposit or current mines and is another way to 2 6 World Potash Developments by solution mining in 2015 (Anonymous, 2012). Khorat and Sakon Nakon Basins in Thailand and Laos, Western Potash expects to begin solution mining of the Danakil Basin in Ethiopia and Eritrea, Lower Congo Milestone mine, also near the Mosaic mine, in 2016 Basin in the Republic of Congo and Gabon, Amazonas (Els, 2012). Production is expected to be about 1.8 Mt Basin in Brazil, Neuquén Basin in Argentina, per year (Els, 2012). The Rocanville mine expansion Maritimes Basin in Canada, and Paradox, Holbrook, and the K3 development in the Elk Point Basin can be and Salado (Permian) Basins in the United States (fig. considered to be the result of brownfield exploration. 1). Several mineral companies, e.g. Vale, BHP, K + S, Other areas of active brownfield development and Allana Potash, have been aggressive in acquiring are in the Pripyat Basin in Belarus and in the other companies’ greenfields properties in the Elk Solikamsk Basin in Russia (fig. 1). Two new mines Point and Danakil Basins. (Krasnoslobodsky and Beryozovsky) in the Pripyat Perhaps the most rapidly developing area is the Basin opened in 2009 and 2012, adjacent to the Danakil Basin (fig.1). In the Eritrean portion of the Starobin #1, #2, #3 and #4 mines (Foreign Policy Danakil Basin, South Boulder Mines has identified Resource Center, 2011; Truscott, 2011b). In the 1.08 Bt at11.35 percent K2O (South Boulder Mines, Solikamsk Basin, work on the Ust-Yayvinsky mine 2012). In the Ethiopian portion of the Danakil Basin, was to begin in the summer of 2012 with start up by Allana Potash continues development of their Dallol 2020, and work on the Polovodovsky mine was to project with a measured and indicated sylvinite begin by 2013 with start up projected to be in 2021. resource of 171.36 Mt of 19.5 percent K2O and an These mines were to replace production from the inferred sylvinite resource of 46.62 Mt grading 19.1 Bereznicki-2 mine expected to close in 2025 and percent K2O. Allana Potash’s measured and indicated the Solikamsk-3 mine (Uralkali, 2011). Other work kainitite resources are 701.55 Mt at 12.8 percent includes replacement of an old hoist machine and K2O, and inferred kainitite resources are 373.71 Mt addition of a second production line at Bereznicki-4, of 12.9 percent K2O. In addition, Allana Potash has a and completion of a new production shaft at the measured and indicated upper carnallitite resource of Solikamsk-3 mine (Uralkali, 2011). 78.5 Mt grading 11.6 percent K2O, an inferred upper Solution mining of the remnant pillars following carnallitite resource of 155.53 Mt of 10.7 percent K2O, completion of conventional mining is a common a measured and indicated lower carnallitite resource of potash industry practice (Moore and others, 2011). In 269.10 Mt of 6.9 percent K2O, and an inferred lower the Salado Basin (Carlsbad District of New Mexico), carnallitite resource of 130.7 Mt grading 7.4 percent Intrepid Potash will convert the former Potash K2O (Rauche and van der Klauw, 2012b). Allana Corporation of America’s Eddy (HB) conventional Potash began a test solution well on their property underground mine to a solution mine. Approximately in September, 2012 (Bruno, 2012a). With a recently 63 percent of the potash ore in this mine was extracted identified source of water, Allana Potash may begin by conventional methods leaving potash-bearing solution mining in late 2014 (Bruno, 2013a). salt as support pillars and buffer zones around oil Several projects in the Lower Congo Basin and gas wells. Construction costs are on the order of include the Elemental Mineral’s Kola Project and Mag $120 to $130 million and will take 12 to 18 months Industries’ Mengo and Makola Projects. The Kola (Intrepid, 2012). In Saskatchewan, solution mining Project has a measured resource of 230 Mt at 20.56 can also remove lower grade potash-bearing salt above percent K2O, an indicated resource of 183 Mt at20.178 and below the primary mining layers in the Prairie percent K2O and an inferred estimate of 261 Mt at Evaporite. 19.16 percent K2O (Dorling and others, 2012). Mag Industries Makola Project has an inferred resource of 9.2 billion tonnes (Bt) of carnallite mineralization Greenfield Development with a grade of 12 percent K2O and 70 Mt of sylvinite

mineralization with a grade of 21 percent K2O in its Greenfield exploration and development has been Makola permit area and a measured resource of 146.7 very active during the past decade. in the following Mt at17.4 percent KCl, an indicated resource of 39.5 basins: Pripyat Basin in Belarus, Pricaspian Basin in Mt at11.2 percent K2O, and an indicated resource of Kazakhstan and Russia, Central Asia Salt Basin in 1.215 Bt at 10.9 percent K2O (Rauche and Van der Uzbekistan, Turkmenistan, Tajikistan and Afghanistan, Klauw, 2010). The Mengo Project contains proven

World Potash Developments 7 reserves of 151.2 Mt of carnallitite at 10.9 percent Challenges for Greenfield Potash K O, probable reserves of 40.3 Mt of carnallitite at 2 Projects 11.1 percent K2O (Rauche and Van der Klauw, 2009). Uralkali announced plans to construct a 2.5 Mt/ year mine in the Solikamsk Basin in Russia (fig. 1) by Greenfield potash projects face a number of 2018 (Truscott, 2011a). Vale’s Rio Colorado project in challenges, particularly when the projects are the Neuquén Basin in Argentina (fig. 1) with a reserve located in relatively undeveloped parts of the world. of 430 Mt is expected to cost about $6 billion (Keen, Understanding the geology of the potash deposit 2012). Because of a recent potash price decrease, Vale develops throughout the lifetime of the mine, but suspended its development of this project (Spinetto increases substantially during the early phases of the and Gonzalez, 2013). SINO-AGRI announced plans project. Knowledge of the engineering geology related to develop a resource of 500 Mt of KCl in the Sakon to mine development can, in part, be transferred by Nakon Basin (fig. 1) in Laos (Wang, 2010). expertise obtained in established mines, but may Several companies are now investigating be unique to the deposit. Major challenges include polyhalite-rich deposits. Sirius Minerals has confirmed obtaining a major energy source where none may be 1.35 Bt of 88.7 percent polyhalite at 25.6 percent present, a consistent water supply, safe transportation, K2SO4 at its York Potash Project in the United and safe storage facilities and effective labor force. Kingdom’s portion (fig. 1) of the Zechstein Basin (RNS, 2012). IC Potash has defined 838 Mt of 80.3 Energy percent polyhalite in the Rustler Formation in the Permian Basin of southeastern New Mexico (Crowl Energy consumption for potash mining operations and others, 2012; Keller, 2012). is considerable but differs on the basis of whether Another potential potash option is in the form of they are conventional underground mines or solution glauconite. Verde Potash, Ltd. (Verde Potash, 2013) mines. Solution mines are more energy intensive deposit in anticipates the production of KCl from because the mining method involves pumping heated glauconite from the Cerro Verde deposit in Brazil to water through the substrate to dissolve the potash supply some of the fertilizer demand in that country. and pumping the resultant brine solution to a surface The indicated resource is 71 Mt at 9.22 percent K O 2 refinery for extraction. Eight of the underground mines and an inferred resource of 2,764 Mt at 8.91 percent in Saskatchewan use a conventional mechanical/ K O (Verde Potash, 2013). 2 flotation process which is less energy intensive than a thermal leaching process employed by one of the Advantages of Brownfield versus operations. A study by Natural Resource Canada (2009) provides a benchmark for energy consumption Greenfield Projects of Canadian potash mines. In 2000 and 2001, the two solution mines and the Brownfield potash developments have a number underground mine in Saskatchewan that used a thermal of advantages over greenfield developments. Costs leaching process required an energy intensity of about for brownfield projects tend to be lower, and the time 1,300 kWh/tonne. The underground mine that used a required for completion of brownfield developments thermal leaching process required an energy intensity are usually faster. The primary factors that favour of about 600 kWh/tonne. The energy intensity of the brownfield projects over greenfield projects include: other underground mines in Saskatchewan was less 1) an established, in-place infrastructure consisting of than 400 kWh/tonne (Natural Resource Canada, 2009). robust transportation, energy and water systems, 2) In 2011, Uralkali used 140 kWh/tonne of production an experienced, trained workforce, 3) an established in their underground mines (Uralkali, 2011).The supply system for items such as machinery, parts, reason for the difference in energy usage between the and chemicals, and 4) the local potash geology and Canadian mines and Uralkali mines is not apparent. engineering geology are known and established. In Canada, the main sources of energy were natural gas at 77 percent and electricity at 20 percent. The remainder was supplied by diesel, propane, gasoline, and fuel oil. Natural gas is used for mine

8 World Potash Developments air heating, building heating, steam generation and Resources’ water requirements for a solution mine are product drying. Electricity is used for powering 734 cubic meters /hr for a projected 2 Mt/yr of product mining machines, hoisting, conveying, ventilation, (Piche and others, 2011) or about 1.7 billion gal/yr. lighting, dewatering, mill operations, tailings This is equivalent to about 3 cubic meters/tonne or 800 management and office/administration facilities. Total gal/tonne of product. natural gas consumption for conventional underground In very arid places like the Danakil Basin, water mines ranged from 160 to 360 kWh/tonne (natural gas that would be needed for solution mining venture usage is reported in these units by Natural Resource may be in scarce supply. However, Allana Potash Canada, 2009). Total electricity consumption for has acquired a property position that contains conventional underground mines ranged from 92 to groundwater in alluvial fans about 5 km away. The 155 kWh/tonne (Natural Resource Canada, 2009). identified reservoir contains an estimated 160 million Usage data was not reported for the solution mines. cubic meters or 42 billion gallons of water (Bruno, Mines in other parts of the world may not require 2012a, 2013; Rauche and Van der Klauw, 2012a). energy for heating and some may utilize solar energy Allana Potash projects production of about 2–3 Mt for evaporation instead of other costly types of energy MOP per year which water usage of about 16 million for dewatering. The potash projects in Danakil are cubic meters, which would translate to about 5 to 8 good examples for use of solar energy in processing cubic meters per tonne or 1,300 to 2,100 gal/tonne of and the lack of a need for heating. On the other hand, product. This projected water usage is very similar to cooling may be more of an issue with average daily that reported for solution mines in Saskatchewan. summer temperatures of 113o F (Rauche and Van der Klauw, 2012a). Transportation

Water Potash is a bulk commodity and transportation is mainly by rail or ship to keep transportation costs low. Potash mines require a considerable amount of Potash is presently mined in only 12 countries and water, both in the processing of the potash ore and in transportation to countries with inadequate domestic solution mining. In 2010, PotashCorp’s water usage sources of potash, such as China, India and Brazil, is for processing of potash from their conventional predominantly via marine transport. Transportation underground mines included 550 gal/tonne of product within a country or between adjacent countries is at Lanigan, 1,450 gal/tonne of product at Rocanville, dominantly by rail. Saskatchewan potash is shipped 1,600 gal/tonne of product at Allan, and 6,300 gal/ by unit trains either to port facilities in Vancouver, tonne of product at Cory (PotashCorp, 2012c). British Columbia, Portland, Oregon or Thunder Bay, Uralkali’s water usage for processing of potash Ontario on the Great Lakes. Landlocked countries from their conventional underground mines in the such as Belarus, or countries with extremely long Solikamsk Basin was 340gal/tonne (Uralkali, 2011). distances to port facilities such as Russia, have to ship Reported water usage for solution mining is quite their products either 8,000 km to Vostochny, Russia variable and probably is dependent on whether the on the Pacific Ocean to St. Petersburg, Russia, or mine is established or has to create solution chambers through other countries Ventspils, Latvia or Klaipeda, in less soluble halite or may be solutioning more Lithuania on the Baltic Sea or Nikolaev, Ukraine on soluble carnallite-rich rocks rather than less soluble the Black Sea (Moore, 2006, 2010; Lomakin, 2003, sylvite-bearing rock. Mosaic’s Belle Plaine solution 2009). Shipping from the Solikamsk Basin to St. mine in Saskatchewan uses 5,000 gal/min equal to 2.6 Petersburg or Nikolayev is on the order of 2,800 to billion gal/yr to produce about 2 Mt/yr which is equal 3,000 km (Moore, 2006). When shipping through other to 1,300 gal/tonne of product (M. Cocker, on-site tour, countries potash companies may be subject to higher December, 2009). Western Potash recently contracted tariffs cutting into their profits (Lomakin, 2003, 2009). with the City of Regina to process their treated Potash is subject to product degradation or effluent at a rate of 21.9 million cubic meters per year destruction by exposure to moisture. Transportation of or the equivalent of 5.8 billion gal/yr for the first 6 the potash product must include safe storage facilities years (Fowler, 2012) to produce 2.8 Mt/yr (Hardy at the mine site, at the port facilities, and specialized and others, 2011) or 2,066 gal/t product. Karnalyte rail cars or trucks to prevent exposure to moisture

World Potash Developments 9 during transit. Canpotex, the overseas marketing and port with a specialized potash terminal available distribution company owned by Mosaic, PotashCorp for these potash producers was at Ventspils on the and Agrium in Saskatchewan, increased the number of Baltic Sea (Lomakin, 2003). In order to ship potash its specialized railcars to 5,500 in 2009 (PotashCorp, to other countries such as China, India and Brazil, 2010). PotashCorp owns or leases 3,500 potash subsequent improvement of facilities was achieved by railcars, also (PotashCorp, 2010). increasing shipping capacity at Ventspils in Latvia, and If rail or road facilities are non-existent or require construction of new terminals and storage facilities upgrades to carry the millions of tons per year at the ports of Nikolaev and Klaipeda in Ukraine, (including rail cars or trucks) infrastructure costs Vostochny, and St. Petersburg in Russia (Lomakin, may increase substantially. When the former Soviet 2003). Union was disbanded in 1991, the export market was Some of the newer facilities that will need to be essentially non-existent; most potash production was built will be in South America and Africa. Vale will for internal consumption, and a scarcity of specialized need to construct a maritime terminal for its potash rail cars hampered initial start-up of potash exports output from the Rio Colorado project in Argentina from Belarus and Russia during the 1990s (Lomakin, (Vale, 2012). The Danakil Basin lies astride the Eritrea 2003). In 2009, Sylvinit and Uralkali have a combined - Ethiopia border with South Boulder Mine’s Colluli shipping capacity of approximately 8,100 railcars project in Eritrea and Allana Potash’s Dallol Potash (Lomakin, 2009). Anticipated expansion of facilities project in Ethiopia. Because of the political situation, and production in these countries during the next separate port facilities will be needed (South Boulder decade will require increased transit and storage Mines, 2011; Rauche and van der Klauw, 2012b). capacities. South Boulder Mines would have to upgrade a current Also, many greenfield projects are in parts of road about 65 to 75 km to the Red Sea coast where the world where adequate railroads or roads are a deep-sea port at Anfile Bay would also need to be non-existent or presently inadequate. Vale’s Rio constructed (South Boulder Mines, 2011). Djibouti Colorado project in the Neuquén Basin will require the will begin construction of a new port at Tadjourah renovation of 440 km of railroad track and building on the Red Sea for Allana’s potash expected to be of 350 km of new track (Vale, 2012). Specialized in production by the end of 2014 (Bruno, 2012b). hopper cars are required for those projects anticipating The approximately 800 km of road would need to be rail transportation. Presently, road access from upgraded. Allana Potash’s Danakil project consists of 300 km Capacities of existing terminal facilities are also of paved road, 295 km of all-weather road and 190 being expanded. Canpotex is improving its facilities km of off-road (Rauche and van der Klauw, 2012b). in Portland, Oregon, and Vancouver, British Columbia Transportation of 2 Mt per year from that site would may build a new terminal in Prince Rupert, Vancouver require heavy and frequent truck transport and would (Bruno, 2012c). probably require paving of the non-paved roads and upgrades to the paved roads. Mining, maintenance, geological, engineering and management expertise Deep water ports and safe storage facilities Because potash is contained within salt, mining differs in many facets from most other types of mining Most of the world’s potash deposits are located and requires unique mining techniques and expertise to inland from existing deep-water ports and many develop the potash-bearing salt deposit and process the greenfield projects would need new deepwater ports ore (see Garrett, 1996; Jones and Prugger, 1982; Piché facilities to be constructed. Canpotex operates bulk and others, 2011). Equipment operators and machinists commodity terminals in Vancouver, British Columbia, are important to operate and maintain the mining and Canada and Portland, Oregon, U.S.A. from which processing equipment. A trained and experienced Saskatchewan potash is shipped. A historical example geological, engineering and management staff is of the need for new deepwater ports facilities was required for both underground and solution mines related to the change in potash markets for potash as well as for the processing plants (Moore, 2010; producers in the former U.S.S.R. In 1988, the only Mosaic, 2011). The size of these workforces is quite 10 World Potash Developments varied, but staffing and support of these workforces engineering services for upgrades or technical can be challenging but is critical for successful mining inspections, control equipment programming, ventures. Present expertise is concentrated in the millwrights and electricians (Hatch, 2012). United States, Canada, Germany, Russia, and Belarus. Labor costs represent 20 to 25 percent of PotashCorp’s Production downtime production costs (PotashCorp, 2010). Even in Saskatchewan, finding qualified employees can be a Potash mine operations are occasionally significant hurdle for new mining ventures (Bout and temporarily curtailed or shut down. These mine Chiang, 2008). production and development downtimes may be due A larger, temporary workforce is needed for to mine expansion, mine and equipment maintenance, construction of both conventional underground and low potash prices, or to reduce potash supplies to the solution mines. Construction of a solution mine may world market. Existing mines commonly use these require 150 to 200 employees at Intrepid’s HB mine periods to upgrade or expand the mine facilities as (Intrepid, 2012) to 1,100 employees at the K+S Legacy noted in the section on increased mine production. mine (K+S Potash Canada GP, 2012). PotashCorp’s Planned maintenance downtimes may range from Rocanville conventional mine expansion requires 500 a few days to 3–4 weeks (Hatch, 2012). Prolonged, workers for construction work (Moore and others, market related downtimes of one or more months 2011). Allana Potash’s proposed open-pit mine and require retaining trained mine staff which may be plant in the Danakil Basin will require an estimated difficult in underdeveloped parts of the world. 2,200 personnel while its solution mine alternative will require about 250 personnel (Rauche and Van der Klauw, 2012a). General construction costs and time Conventional underground potash mining and required processing require a large, trained workforce that varies considerably. Mines in Saskatchewan employ Construction of a greenfield Saskatchewan-type about 400 to 600 employees (PotashCorp, 2012c). conventional underground potash mine with a 2 Mt/ Sirius Minerals’ proposed York mine is anticipated to yr capacity is estimated to require a minimum of 5 have a workforce of 1,000; the nearby Boulby mine to 7 years (Moore, 2010; Doyle, 2010). Construction has a present workforce of 800 (Sirius Minerals, involves at least 46 major tasks that can be divided 2012). Competition for the trained workforce may into four phases: 1) exploration; 2) establishment of be intense in that area. The Uralkali mining complex infrastructure; 3) construction of underground mine; that consists of 5 mines and 7 ore-treatment plants in and 4) construction of the surface mill (Moore, 2006). the Solikamsk Basin (fig. 1) has a workforce of about In 2010, capital costs were in the order of C$3.5 to 12,500 (Uralkali, 2011). C$5 B (Moore, 2010; Doyle, 2010) for developing Solution mines commonly require a much a greenfield underground potash mine, compared smaller workforce. At Intrepid’s HB mine in New to just C$1.6 B in 2006 (Moore, 2006). Brownfield Mexico, a workforce of 30 to 40 is anticipated mine construction usually requires 5 years to bring (Intrepid, 2012). PotashCorp’s Patience Lake mine online a 1 Mt/yr capacity mine and costs less, usually in Saskatchewan employs about 95 (PotashCorp, in the range from 25 to 50 percent of a greenfield 2012c). In Saskatchewan, K+S anticipates employing mine. Initial costs of a mine and mill would depend, 320 workers at its Legacy mine (K+S Potash Canada in part, on factors such as conventional vs. solution GP, 2012), and Encanto Potash, Ltd. anticipates mining, depth of ore body, and geographic location. employment of 500 (Berube, 2012c). Differences in Infrastructure costs are directly related to geographic employment sizes may be related to secondary solution location, the absence or presence of nearby roads and mining of pre-existing underground development at railroads, utilities, and distance to port facilities if the HB and Patience Lake mines, while the Legacy distribution by water is expected. and Encanto Potash’s projects will be completely new Construction of a greenfield Saskatchewan-type solution mines. underground solution mine is estimated to require 3 Contracted, specialty outside services are required to 5 years to reach a maximum production capacity during maintenance downtimes. These can include of 3 Mt of potash per year(K+S Potash Canada, Ltd.,

World Potash Developments 11 2011; Karnalyte Resources, 2012).. The K+S Legacy machines are based in North America and Europe, so solution mine project in Saskatchewan is projected supply of replacement parts can be a critical part of to cost C$3.25 B with construction lasting 4 years mining operations in remote locations. (Berube, 2011; Hopf and others, 2012). Karnalyte Underground mining machines beyond the Resources solution mine is expected to cost C$2 B initial development equipment and supplies, mining with a maximum production capacity of 1.3 Mt of maintenance supplies include a myriad of items KCl per year. This mine will be mainly in carnallite ranging from electric motors, conveyor belts, idlers, mineralized rock and will also recover 100,000 tons of gearboxes, tires, filters, hydraulic pumps, replacement MgCl2 brine and 104,000 tons of hydromagnesite per screens, crusher components, flotation drives and belts, year (Karnalyte Resources, 2012). to oils, grease, grinding disks, welding rods, paint, and processing chemicals (Hatch, 2012). Living facilities (30 to 50 + years) Summary Some potential greenfields projects are in remote and sometimes inhospitable parts of the world. During the past decade global demand for potash Because of the large expenditures to develop a potash has increased because of increasing demand for mine, they generally should be expected to have a more production and better quality of food for an minimum mine life of 30 to 50 years. Providing for increasing and wealthier population. Some sources living facilities for a permanent workforce for that of potash have been exhausted or lost to mine failure. amount of time may be a problem in some of these Increasing prices for potash have led to an increase in areas. The average daily temperature in the Danakil potash exploration, new mine development and mine Basin is 113oF (Rauche and Van der Klauw, 2012a). expansion. Both brownfield and greenfield activities have occurred mainly in well-established potash Potash mining supply chain districts such as the Elk Point, Paradox, Zechstein, Pripyat, and Solikamsk Basins. Newer, greenfield, A supply chain is essential for successful mining exploration projects that appear to be moving ahead operations, especially if the operations are in remote include those in the Neuquén, Lower Congo, Danakil and relatively undeveloped parts of the world. To be Basins, Pricaspian, and Central Asia Salt Basins. expected, essentials such as food and potable water Brownfield mines have certain advantages for 200 to 1,000 mine and support staff need to be over greenfield mines because of the established delivered on a continual basis. Maintaining a supply infrastructure available to brownfield mines. chain for the mining and processing operations can be Infrastructure advantages would include energy, water, rather challenging and expensive as documented in transportation, work force, geological and engineering detail by Hatch (2012). Supply by aircraft is possible expertise, and an established supply network. A for the relatively small staff and equipment needed guaranteed water supply is needed for potash mining during the exploration phase. Development and mining and appears to range from 550 to 6,300 gal/tonne phases require a considerably more robust supply of product for processing of conventionally mined chain. ore and range from 1,300 to 2,100 for mining and Shaft sinking operations are complex projects processing of potash from solution mines. A reliable commonly requiring ground freezing techniques source of energy is needed for the approximately 400 and complex, high pressure shaft liners (Garrett, to1,300 kWh/tonne to produce the anticipated potash 1996; Moore, 2012). Specialized materials must be product. New transportation lines, in some instances transported from the manufacturing sites to the project over several hundred kilometers, will be required for areas. Longwall mining equipment is similar to that many greenfield projects. Specialty railcars, trucks and used in coal mining, but must deal with variable storage facilities will be needed to protect the potash hardness of the ore, dust, and the prohibitive use of product. New deep-water port facilities may also traditional water-cooling systems. Nearly all of the be required. In remote areas, a workforce trained in potash mining machines are custom made based on operating a potash salt mine may be difficult to obtain, the unique geology of each mine and may weigh up to especially for much of an anticipated mine lifetime 250 tons (Moore, 2012). The manufacturers of these that can extend well past 30 or 40 years. 12 World Potash Developments New greenfield and brownfield potash mines Berube, A., 2012a, Potash expansion plans on time and require a timeframe of approximately 3 to 7 years of on budget. http://potashandphosphate.com/potash- exploration and development before they reach their expansion-plans-on-time-and-on-budget/ Website accessed August 8, 2012. anticipated production capacity. Capital costs for Berube, A. 2012b, Potash miners duck todays storm eye developing a greenfield underground potash mine in tomorrow’s promise: http://potashandphosphate. Canada were in the order of C$3.5 to C$5 B in 2010 com/press/potash-miners-duck-todays-storm-eye- and up to C$2.5 B for a solution mine. Energy costs tomorrows-promise/ Website accessed 8/31/12. for a solution mine are substantially higher, however. Berube, A., 2012c, Ottawa seeks public comment on Mine expansion has occurred where there are proposed potash mine on Sask. Reserve. http:// opportunities to increase the throughput of ore investorintel.com/potash-phosphate-press/ottawa-seeks- to the surface. The main options for doing this in public-comment-on-proposed-potash-mine-on-sask- a conventional underground mine are to add an reserve/ Website accessed December 20, 2012. additional production shaft or increase the capacity Bout, J., and Chiang, K., 2008, Global potash supply—a focus on Saskatchewan exploration: Toronto, CIBC of ore skips and increasing the height of the mine World Markets Inc. Equity Research Industry Update, headframe. With increased mine throughput, mill 70 p. capacity must also be increased. Although current Bromby, R., 2012, Potash- solid fertilizer business and anticipated brownfield and greenfield mine predicted for 2012. http://www.potashandphosphate. development is causing an increase in potash com/2012/03/potash-solid-fertilizer-business-predicted- production capacity and a surplus over demand, the for-2012.html#tp/ Website accessed April 3, 2012. time required for mine development may range from Brown, L.R., 2011, The new geopolitics of food. http:// 3 to 7 years and requires a commitment to anticipated www.foreignpolicy.com/articles/2011/04/25/the_new_ potash prices and markets well beyond the present. geopolitics_of_food?page=0/ Website accessed April 6, 2012. Bruno, A., 2012a, Allana Potash news release. http:// References Cited proedgewire.com/potash-phosphate-intel/allana-potash- says-it-is-on-target-for-production-to-start-in-late-2014/ Website accessed October 16, 2012. 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14 World Potash Developments Saskatchewan, Inc., 62 p. (Available for download at Rauche, H., and Van der Klauw, S., 2009, Updated reserve http://www.sedar.com.). and resource estimate for Magminerals Kouilou Potash Moore, Garth, Danyluk, T.K., Franklin, Bob, Prugger, Project, Republic of Congo, prepared for MagMinerals Arnfinn, and Vander Most, Anastasia, 2011, National Potash Corp.: Erfurt, Germany, ERCOPSPLAN instrument 43–101 technical report on Rocanville Ingenieurgesellschaft, 144 p. plus appendixes. potash deposit (KLSA–002) Saskatchewan, Canada: Rauche, H., and Van der Klauw, S., 2010, Technical Saskatoon, Saskatchewan, Potash Corporation of scoping study, Maola exploration license, Kouilou Saskatchewan, Inc., 68 p. (Available for download at Region, Republic of Congo, prepared for MagMinerals http://www.sedar.com.) Potash Corp.: Erfurt, Germany, ERCOPSPLAN Moore, P., 2012, Booming pink gold: International Mining, Ingenieurgesellschaft, 97 p. plus appendixes. 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