West Australian Article Today - I must say, probably one of the more well written and insightful articles compared to their previous SO4 "promotions"
Nascent industry in focus after leading player failsStuart McKinnonThe West AustralianFri, 22 October 2021 9:27PMCommentsStuart McKinnonSalt Lake Potash’s Lake Way project near Wiluna.Forging a new industry is never easy but it remains unclear whether this week’s demise of Salt Lake Potash represents a learning experience for other players or a portent of more corporate failures to come.The Ian Middlemas-chaired company was one of a handful of companies looking to tap WA’s vast inland salt lakes for a high-value fertiliser known as sulphate of potash.But Salt Lake was placed in the hands of receivers on Wednesday after failing to raise an extra $100 million it needed to fix major harvesting and processing problems at its Lake Way project near Wiluna.The company had adopted an expedited strategy to be one of the first players into production in the fledgling industry under its ambitious former chief executive Tony Swiericzuk.Former Salt Lake Potash chief executive Tony Swiericzuk at Lake Way.Salt Lake raised more than $500m in debt and equity over the past five years to realise its dream and went cap in hand to the market in July for the third time after saying Lake Way was fully funded in August last year.
For investors, it was a bridge too far.Among major creditors of the failed company are the Federal Government’s Clean Energy Finance Corporation, which was in a syndicate with Taurus Funds Management providing $US138m ($184m) in debt funding for Lake Way.SOP is used as a fertiliser for higher-value, chloride-sensitive crops such as fruits, vegetables, nuts, tea, coffee and tobacco. It commands a healthy premium to the more commonly known and used muriate of potash. The majority of the world’s SOP is produced from MOP using a dirty, energy-intensive operation known as the Mannheim process.But the aspiring crop of WA players plan to use more natural processes (sun, wind, evaporation) to produce SoP at substantially lower operating costs than MOP converters.The clean, green image allows them to boast strong ESG credentials and promote their product as lifting crop yields amid shrinking arable lands to help feed the world’s growing population.
The mining process involves sinking a bore or digging a trench in the surface of salt lakes to access hyper-saline brine that is then pumped into ponds to evaporate naturally to create salts. The salts are then processed to extract the potassium sulphate, commonly known as sulphate of potash.But Salt Lake reported problems with the availability of feed salts for harvesting within its harvest ponds and its flotation process was flawed.Part of the difficulty for the emerging crop of players is that SOP has never been produced commercially in Australia and even globally very few people understand how the process works on a scaled level.
As one Perth broker said: “The thematic looks fantastic but this was always a high risk bet”.“You are dealing with hydrogeology which has the influence of the elements (rainfall and sunshine) on top of that, so it’s a level of resource modelling beyond that of your typical static hard rock deposit.”One of the more colourful players in the nascent industry told WestBusiness recently: “You don’t have to be dumb to f... this up. It’s not like iron ore where you chuck a rock in and it comes out the other end”.And then there’s the high costs of aspirants having to transport and ship their product from remote locations in WA to global markets, predominantly in the Northern Hemisphere. (
wonder which ASX SOP company said this?)One player defying the naysayers is Kalium Lakes, which this month declared first SOP production from its Beyondie project 160km south-east of Newman and last week promptly raised $50m to expand production.Kalium has engaged German potash experts to help it with its project courtesy of its 100 per cent offtake partner, the chemicals giant K+S.Despite its recent success, Kalium also experienced challenges when in May last year it was forced to seek $60m in an emergency raising to cover cost blowouts at Beyondie.On the positive side, prices for the commodity are up strongly this year to higher than $US600/t on global sanctions against big SOP producer Belarus and crop prices at eight-year highs.Kalium Lakes chief executive Rudolph van Niekerk. Credit: Michael BainKalium Lakes chief executive Rudolph van Niekerk said the failure of Salt Lake was a blow for the industry, but he believed the problems at Lake Way could be fixed.
Agrimin is another key player in the sector with its sprawling Lake Mackay project in the East Pilbara, which it touts as the world’s largest undeveloped SOP deposit.Chief executive Mark Savich said the Salt Lake experience provided opportunities for the rest of the industry to learn.“The highly-promoted, fast-tracked strategy was always going to be challenge in a new industry,” he said.“We utilise a natural evaporation process that you can’t expedite. And I think the SO4 situation is more a result of a compressed development schedule and not allowing enough time for the evaporation of brine to generate those feed salts.“It’s not like hard rock mining where you can throw more trucks in the pit, dig faster and get more ore for the plant.“In the potash industry, we can pump more brine out of the lake but you are at the mercy of nature to evaporate that brine away and leave the salt.”
Mr Savich compared potash in WA today to the State’s lithium industry, which went through a similar maturing phase a few years ago before finding its feet.“On the other side of all of this, the SOP price is at record highs and we have never seen so much inbound interest in what we are doing.”Another industry aspirant is Australian Potash, which is developing the Lake Wells project near Laverton.
Australian Potash managing director Matt Shackleton. Credit: Amber Lilley/Kalgoorlie MinerManaging director of Matt Shackleton said he believed investors understood the reasons behind Salt Lake’s failure and it had allowed other players to differentiate themselves.“There has been some delays, but I don’t think there’s been any structural damage to the industry and certainly nothing terminal,” he said.“I’m glad the band-aid has been ripped off.
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