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From: Biniam Tekle (biniamt@dehai.org)
Date: Wed Sep 01 2010 - 07:24:40 EDT
Potash creates growing interest: fertiliser
Tim Boreham
From: The Australian
September 01, 2010 12:00AM
HERE'S an honesty test: who knew anything about the potash market
before BHP Billiton's tilt for Canadian big kahuna Potash Corp?
We suggest that 99 per cent of the room wouldn't raise their arms, and
those who do are fibbers or fertiliser tragics. Given the Big
Australian's ballsy ploy, we'll be hearing much more about the
potassium-rich substance that is as crucial to growing food as
phosphate.
For the uninitiated -- that is, the 99 per cent -- potash is the
catch-all name for various potassium salts. Most fertilisers consist
of three core elements -- nitrogen, phosphate and potassium -- with
the consistency varying according to the type of crop.
Potash global consumption stands at 50 million tonnes a year and
unlike most raw materials Australia doesn't produce an ounce of it.
Production is dominated by Russia's Silvinit and Uralkali, rumoured
merger partners that account for more than half of global production.
Traditionally, Germany has been the leading producer.
South Boulder Mines (STB) chief Morry Hughes says there are barriers
to developing potash deposits, including their depth: the last new
mine started in Germany in the late 1980s. But on the plus side
they're usually uniform in quality and also extensive. Potash Corp,
the biggest single producer, acts as oil's equivalent of an OPEC swing
producer, curtailing or increasing production according to demand
trends.
The global potash price has been favourable, hovering at about $US340
a tonne. This compares with the average $US620 a tonne at the 2008
peak, but is well up on the $US175 a tonne level of 2006.
As with phosphate, potash pricing was meant to be immune from the
global financial crisis, despite the perception that fertiliser is
immune from the cycles because everyone has to eat.
In truth it is more complicated: corn and palm oil growers created a
spike in demand when oil prices soared because their product was being
used for biodiesel.
Locally, there are three or four resource juniors playing in potash,
although not necessarily exclusively in that commodity.
South Boulder Mines has been better known for its Duketon nickel
venture in Western Australia with Independence Gold, but it's also
appraising its "world class" Colluli potash project in Eritrea.
South Boulder had a tenement at Lake Disappointment, next to fellow
potash hopeful Reward Minerals (RWD), but native title difficulties
sent the company scouring the world.
It settled on the emerging mining province of Eritrea, where potash
has been used for centuries.
"We have been involved in potash for some time, which not many people
have given us credit for," Hughes says.
But with BHP getting into potash in a humungous way there are more
investors coming on board. He estimates between 20 per cent and 25 per
cent of South Boulder's share base has been attracted by potash.
In a 50-50 venture with Rum Jungle Uranium, Reward is working two
exploration leases over a 150km expanse in central Australia, from
Lake Amadeus to Karinga Creek.
"An analogous model would be the Great Salt Lake in Utah, the largest
potassium sulphate producer in the US, [or] the Dead Sea."
Speaking of Utah, Transit Holdings (TRH) has earned a 75 per cent
interest in a tenement spanning 390sqkm, in the state's sparsely
populated southeast. The parties are aiming for an "exploration
target" of 2.3 billion tonnes.
Completing our potash troika, Elemental Minerals (ELM) recently
started drilling on its Sintoukola project in the Republic of Congo,
part of a four-year effort to take it to bankable feasibility stage.
The Australian accepts no responsibility for stock recommendations.
Readers should contact a licensed financial adviser
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