An Overview of the Sodium Chloride (Salt) Market in Western Canada (V.02)

Sodium Chloride Market: An Overview of the Sodium Chloride (Salt) Market in Western Canada (v.02) Author: WaterSMART Solutions Ltd. Date: December 21, 2012 Table of Contents Executive Summary 1 Introduction 1 Sources / Types of Salt 2 Salt Deposits 3 Extraction / Production Methods 5 Primary Uses for Salt 6 Price 6 Distribution 7 Canadian Salt Market 9 Western Canada Salt Market 9 Salt in Oil Sands Mining 12 Road Salts 14 Sodium Carbonate and Sodium Bicarbonate 17 Caustic Soda and Sodium Chloride Consumption in SAGD 18 Summary 20 Tables Table 1 - Extraction and Production Technology ______________________________________________________ 6 Table 2 - Canadian Salt Market by Form ____________________________________________________________ 7 Table 3 - Final Packaging and Price of Salt to Public Consumer __________________________________________ 7 Table 4: Western Canada Salt Market Overview _____________________________________________________ 11 Table 5 - Primary Uses for Salt in Western Canada ___________________________________________________ 12 Table 6: Chloride Based Road Salts ________________________________________________________________ 14 Table 7: Radius of Competitiveness _______________________________________________________________ 16 Figures Figure 1: Table 2.3 Survey of High-Reduction and ZLD Technologies for Municipal Utilities ____________________ 2 Figure 2: Major North American Salt Deposits ________________________________________________________ 3 Figure 3: Western Canada Salt Deposits ____________________________________________________________ 4 Figure 4: Solution Mining ________________________________________________________________________ 5 Figure 5: Railway Distribution _____________________________________________________________________ 8 Figure 6: Canadian Salt Production by Form _________________________________________________________ 9 Figure 7: Estimated Salt Production from Oil Sands Mines _____________________________________________ 13 Figure 8: Total Salt Production Comparison _________________________________________________________ 14 Figure 9: Road Salt Consumption in Alberta _________________________________________________________ 15 Figure 10: Radius of Competitiveness ______________________________________________________________ 16 Figure 11: Solvay Process _______________________________________________________________________ 17 Figure 12: Process for Producing Soda Ash from Trona ________________________________________________ 18 Figure 13: Chemicals Derived from NaCl ___________________________________________________________ 19 Overview of the Salt Market in Western Canada December, 2012 Executive Summary The Athabasca oil sands bitumen reserves are underlain by pressurized saline aquifers. During and prior to the mining of the bitumen, mine operators must manage the aquifers. Historically, the pressurized aquifer waters encountered have been of relatively good quality and have been used in the process or returned to the environment. However, as mines are moving into new areas, more and more saline water is being encountered, which has introduced the challenge of managing the dissolved salts. Sodium chloride is a significant if not always the major part of the salts in mine depressurization brines. Sodium chloride is an essential part of life on earth. It is a main component of our diet and is used for seasoning, colouring, and preserving our food. Sodium chloride is also an essential raw material for the production of glass, paper and plastics, as well as de-icing roads and minimizing dust from gravel roads. Currently, Canada is one of the world’s largest producers of sodium chloride, and the largest per capita consumer. Canada is connected in almost every marketable way to sodium chloride, including extraction, processing, importing, exporting and consumption. Canada contains some of the largest sodium chloride rock deposits of salt in the world, which are spread out in three different locations across the country in six different Provinces. This report provides a summary of the commercial sodium chloride market in western Canada so that oil sands mining operators can assess the potential of a beneficial use outlet for sodium chloride produced from mine depressurization brine. Introduction Currently the oil sands mining companies have four potential options to help address the challenge of final disposition of brine or salt from mine depressurization. Return the Salt to Where it Came From: In this scenario concentrated brine or crystallized salt is returned to the vicinity of where it was produced. Return to the Environment Return to the Environment alternatives include discharge to local surface water outlets (rivers, streams, and lakes) Disposal: Disposal options include deep well injection of brine, disposal to surface ponds, or disposal into landfills. Beneficial Use: Using the collected brine for other uses either locally (northern Alberta) or regionally (western Canada), has the potential to create a sustainable outlet for brine or salt from mine depressurization. For the purpose of this report it will be useful to define several terms: Salt as defined in chemistry: In chemistry, salts are any of the various ionic compounds which are created by the reaction of an acid and base. From a practical perspective, they are the inorganic constituents in brine which can be matched as anions and cations into readily identified minerals. Salt in general use: Most references to “Salt” are intended to mean sodium chloride. Page 1 Overview of the Salt Market in Western Canada December, 2012 Sources / Types of Salt Figure 1 shows Table 2.3 from Survey of High-Reduction and ZLD Technologies for Municipal Utilities, Mickley, Water Reuse Foundation, 2008 show the various major salts that are often found in natural brines: Figure 1: Table 2.3 Survey of High-Reduction and ZLD Technologies for Municipal Utilities This report will focus on the sodium chloride market in western Canada and the available options for the beneficial use of brine collected from oil sands mining operations. In this report, references to salt are references to sodium chloride. Sodium Chloride, commonly known as salt, is found throughout the world in three primary forms, seawater, salt rock formations, and in saline groundwater wells (also known as brine or saline water). Salt found in a solid state, in salt rock formations, were deposited thousands of years ago from shallow seas that were disconnected from the ocean and left to dry up. Page 2 Overview of the Salt Market in Western Canada December, 2012 Salt Deposits Salt, also known as halite in its solid and natural state, can be found throughout North America. A sedimentary salt deposit or basin is described as a “depression in the earths surface previously covered by shallow seas, resulting in the deposition of layers of mineral-rich sediment” (NRC, 2009). In Canada, salt deposits are found in three major rock formations. The salt deposits in western Canada extend from southwestern Manitoba through central Saskatchewan up into northern Alberta. In eastern Canada, major salt deposits are located in southern Ontario around Lake Huron and Lake Erie in what is referred to as the Michigan Basin, and underneath the Maritime Provinces. Figure 2 illustrates the major salt deposits found throughout North America. Figure 2: Major North American Salt Deposits Sifto’s Operation at Goderich Ontario Sifto Canada’s mine in Ontario is the world’s largest salt mine. Sifto’s operation incorporates both a series of mines and an evaporation plant. The evaporation plant is used to separate the water and salt. Additional washing and filter drying allows Sifto to produce high grade food salt. The largest salt deposits in Canada are found in the western Provinces, extending over 390,000 square kilometres through Manitoba, Saskatchewan and Alberta. The salt deposits in western Canada average 400 feet in depth and contains an estimated one million billion tonnes of salt (NRC, 2009). Figure 3 illustrates the salt deposits in western Canada. Page 3 Overview of the Salt Market in Western Canada December, 2012 Figure 3: Western Canada Salt Deposits Page 4 Overview of the Salt Market in Western Canada December, 2012 Extraction / Production Methods There are four main technologies used to produce salt; solar evaporation, solution mining, vacuum pan evaporation, and rock salt mining. In western Canada, there are two primary production techniques used to extract salt; solution mining and rock salt mining. In Alberta, salt is primarily recovered the use of a technology known as solution mining. Solution mining is very similar to that used in the in situ production of bitumen. Water (or another liquid solution) is pumped down hole into deep salt deposits to dissolve the salt. The dissolved salt creates a brine that is then pumped back to the surface. In order to produce salt in a solid form (crystal or rock) that is easier to transport and use, a process called vacuum pan evaporation is used. Vacuum pan evaporation heats the brine to separate water from the salt. The solution mining process is illustrated in Figure 4. Figure 4: Solution Mining In Saskatchewan, salt is recovered using both solution mining and rock salt mining. In rock salt mining, salt is mined from shallow salt formations using traditional mining techniques. The traditional method involves using shovel and truck to remove the rock salt (halite) from salt mines above or bellow ground. In rock salt mining, companies use

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