As the world population continues to grow, the need to make better use of the limited land suitable for growing crops has also driven a corresponding increase in the demand for fertiliser.

So it’s little wonder that there is a fair bit of excitement from the Australian government about Kalium Lake’s (ASX:KLL) Beyondie Sulphate of Potash (SOP) project reaching financial close with support from a $74m loan from the federal government’s Northern Australia Infrastructure Facility (NAIF).

This funding will allow the company to bring forward construction of a 78km gas pipeline, to connect to the Goldfields gas pipeline, the on-site gas fired power station, communication facilities and an accommodation village.

Along with private sector funding, the company is now pushing ahead with all cylinders firing to meet its schedule of starting production in December 2020.

That the project will create 210 construction and production jobs while providing public benefits of $169m over its 30-year mine life is the icing on the cake for the federal government.

“This is a great example of the NAIF creating new jobs and supporting a new industry in regional northern Australia,” Minister for Resources and Northern Australia Matt Canavan said.

 

Premium fertiliser

So just what is SOP and why is it considered to be a premium fertiliser?

SOP is a high-yield fertiliser containing both potassium and sulphur, the first of which is one of the three primary plant nutrients – along with nitrogen and phosphorus – while the latter is gaining recognition for the role it plays in helping plants grow and resist disease.

Additionally, unlike its competitor Muriate of Potash (MOP), SOP does not contain chloride which is harmful to plants.

While MOP is commonly used on carbohydrate crops like wheat, SOP is used for high-value crops such as avocados, coffee beans and cocoa that are sensitive to chloride.

SOP also has the lowest salinity index of the potassium fertilisers, making it ideal for use in areas that have been affected by salt, which reduces plant growth and quality.

This is of particular concern in Western Australia, where the Department of Primary Industries and Regional Development has warned that more than 1 million hectares of agricultural land in the state’s southwest are severely affected by salt.

 

SOP Players

Kalium Lakes is not very far away from producing SOP, but it is by no means the only small cap SOP player on the ASX.

Salt Lake Potash (ASX:SO4) is nipping at its heels with ambitious plans to start first SOP production in the fourth quarter of 2020 though it has yet to make a final investment decision for its flagship Lake Way project near Wiluna.

The company has term sheets in place with three leading fertiliser distributors who have committed to taking up 70 per cent of the planned production for a five-year term.

It has also built a portfolio of eight other large potassium rich salt lakes in Western Australia.

These include its permits at Lake Wells, which is north of another SOP hopeful’s project.

Australian Potash (ASX:APC) is currently carrying out front-end engineering and design work on its Lake Wells potash project near Laverton.

It is also progressing offtake discussions with a number of potential international partners and commercial banks for funding.

Meanwhile, Agrimin (ASX:AMN) recently signed a haulage joint venture and strategic alliance with Newhaul for the provision of road haulage and road maintenance services for its Mackay potash project that sits on the border of WA and the Northern Territory.

Lake Mackay is the largest known potash-bearing salt lake in Australia and is comparable in size to two major sources of global SOP production.

Rounding out our little feature is ASX newcomer Trigg Mining (ASX:TMG), which only listed on the bourse in October this year.

The company is currently progressing exploration of its East Laverton and Lake Hope Campbell projects.

 

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