Was sent this interesting article today about potash as a critical commodity.
We have all been going gaga in recent months over critical metals — lithium, cobalt, etc. (And, no, that's not "gaga" as in the case of an over-the-hill-resources-writer but in its other meaning, being "intensely enthusiastic about or preoccupied with".)
But why don't we consider potash a critical mineral too? Fortunately, and no one is more surprised than this writer given the general dysfunction and malaise that has robbed so much of our politics of initiative and purpose, this idea is beginning to be recognised.
We have concentrated too greatly when it comes to the concept of "critical", equating it mainly as meaning "technology metals". That is because the lists of such minerals have been drawn up by agencies in countries where manufacturing and technology industries exist in large numbers — the US, the EU and Japan.
But I would suggest that, for Australia's future, when we consider the criticality of commodities, then we also look at what they can do for the Australian economy.
Sorry to go all philosophical on you, but it seems that some of our political agencies are starting to grasp this concept in terms of potash.
Two months ago the Western Australian government reduced ground leasing ratesfor potash projects (given the vast areas that sulphate of potash — or SOP — operations require) and then yesterday the federal government's Cairns-based Northern Australia Infrastructure Facility signed off on a $74 million project funding investment in Kalium Lakes and its Beyondie operation. The company believes its SOP output will be the lowest cost operation outside China.
In fact, the brine lakes of the west are alive with the sound of SOP projects. Agrimin is proceeding with its definitive feasibility study on the Mackay project, Reward Minerals presses on at Lake Disappointment and, at Lake Way, Salt Lake Potash has been doing evaporation trials. And BCI Minerals is aiming to get environmental approvals for its Mardie project by the end of the year
Another player well down the track is Australian Potash whose pilot plant has managed purity levels of 98%. The company is now in the process of raising $5.2 million.
There are other potash players, with several working outside the country but these are therefore beyond the scope of Outcrop's case for critical status.
But that case gives us a double bang for our buck.
Firstly, Australia imports 100% of its potash. Being able to produce home-grown supplies would be an obvious saving for out stretched imports bill, even though at this stage it really focuses on SOP which accounts for about 10% of global demand — but SOP will chip away at the demand for muriate of potash (MOP) as demand for fruit and vegetables grows.
And new projects abroad will be of marginal concern to our SOP push because they are mainly MOP ones: the German firm K+S has the Bethune mine in Saskatchewan, and Uralkali has two biggies in its Russian homeland (as does Eurochem) with other new mines in Turkmenistan and Belarus.
And with the horrendous floods and cattle deaths in Queensland, we are reminded yet again that our farmers need to catch as many breaks as they can. Cheaper, locally produced potash-based fertilisers would be a good start.
The other aspect to that criticality is that a large export market awaits. Everyone needs more food. (Incidentally, it was interesting that one online dictionary gives, as an example of the use of the word, this quote from the New York Times: "The challenge of our future food supply is approaching criticality".)
In 1990 in world population terms, there was 0.3ha of arable land per capita. Next year it will be down to 0.2ha, and continuing to decline through to 2050.
But the need to produce more food will lift all potash boats. For example, the OECD says Brazil will need to lift agricultural output by 41% over the next 10 years.
And BCI Minerals this month pointed out that "the major drivers of SOP demand are the increasing, and increasingly prosperous, Asian middle class in addition to the consideration that increasing crop yields are required for the remaining cultivatable land after urbanisation".
Critical? I think so.
Source: The Outcrop
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