In a few short months, KLL SOP will be travelling South on road trains to be exported through the port of Fremantle.
The trucks will pass through the Northern part of WA's triangle of arable land around Perth. Free delivery to that area would be a pleasure and transport cost to the Southern part negligible.
We don't know what price K + S will charge local farmers - let me have a stab at world market price less the considerable cost of loading, transporting and unloading at Asian ports. There is also a saving in a quick sale plus being paid in Aussie dollars, in which all KLL costs are incurred.
I can see KLL SOP for WA delivery being priced more closely to imported MOP at the farm gate than people realise. Yes it will still command a premium, but nothing like the current differential when both SOP and MOP are imported.
Rival Australian Potash is doing some homework on local WA demand for SOP:
"Whilst the higher cost of SOP has meant that MOP is generally the preferred source of potassium for most crops other than higher-value fruit and vegetables, the much lower salt index of SOP may become an important factor in its adoption.
"According to the Department of Primary Industries and Regional Development, more than 1 million hectares of agricultural land in the southwest of Western Australia is severely affected by salt, which reduces plant growth and water quality.
"Lost agricultural productivity from salinity damage is estimated to be worth at least $519 million per year.
"Even though climate change has resulted in reduced annual rainfall, saline watertables have risen in many areas, meaning that dryland salinisation is a threat to an additional 2.8 to 4.5 million hectares of low-lying or valley floor soils.
“Potassium is central to many crop physiological processes including water relations, sodium uptake and photosynthesis so it makes sense to investigate whether improved potassium status can lift the resilience of crops exposed to frost,drought and salinity,” Dr Bell says.
"Low potassium occurs across 30 percent of soils in the western (Australian) growing region.
SOP also contains attractive Sulphur, again, widely deficient in WA soils. Both S and K are leached from sandy soils.
For K-deficient soils approaching salinity limits, this new SOP supply will be a godsend and why the WA Agriculture Department are over the moon about a domestic SOP supply.
I suspect not much of the initial 90,000t production of KLL SOP will make it onto the boat at Fremantle.
I welcome comment, tear down or insight from any WA farmers following KLL on Hot Copper.
CONVICTION BUY
Ash
KLL Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
(20min delay)