Feds back potash again as Reward Minerals claims major project status
Food & Agriculture
Food & Agriculture
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Reward Minerals (ASX: RWD) has become the fourth sulphate of potash developer to claim major project status as the Federal Government backs in the sector to support the growth of Australia’s ag industry.
The announcement today arrested some of the recent malaise in the company’s share price, which climbed 35% or 3.5 cents higher to 13.5c at 3.20pm today.
Its ‘Lake Disappointment’ project in the Pilbara follows Kalium Lakes’ (ASX:KLL) Beyondie, Agrimin’s (ASX:AMN) Mackay and BCI Minerals’ (ASX:BCI) Mardie projects also in WA’s north, which received the designation in 2019 and 2020.
The recognition is effectively an endorsement from the Federal Government that a project fits in with national development goals, and provides it with priority access to government agency support to smooth the approvals process.
Lake Disappointment would produce about 407,500tpa of SoP from saline brines, generating an estimated $2.5 billion in earnings over its 25-year life according to a PFS released in 2018.
Reward already has its major environmental approvals from the State and Federal Governments, but views its major project status listing as an opportunity to make Lake Disappointment more attractive for new investment.
Reward managing director Greg Cochran told Stockhead the company’s next step would be to secure a strategic partner to progress the project further.
He believes today’s listing should improve Reward’s prospects of securing approvals from the Foreign Investment Review Board.
“For us, the key area is in looking to the next phase of the project where we are looking for a strategic partner,” he said.
“It’s quite possible they may come from offshore and that may require FIRB approval.
“That’s a critical step. It’s been 12 years since I last did a FIRB approval and things have changed significantly over the last few years.”
At present Australia imports all of its SoP, but that is set to change with at least six advanced projects in the queue to produce the high value fertiliser over the next few years.
Salt Lake Potash (ASX: SO4) was due to be the first cab off the rank at its Lake Way project in central WA, but is still to announce commercial production, while Kalium Lakes (ASX: KLL), which is supplying product for the domestic market to German conglomerate K-Plus-S, has set a September date for the start of Beyondie.
In announcing the news Minister for Industry, Science and Technology Christian Porter said the project will strengthen the security of domestic agriculture and help the Government reach its development goal of growing the sector to a $100 billion industry by 2030.
Resources (and until recently Northern Australia) Minister Keith Pitt said it would generate economic opportunities in Australia’s north and the local Martu people by selling SoP both domestically and overseas.
Australia’s potash cohort is looking to ramp up from no domestic production to potentially million of tonnes of production a year over time, and Cochran cautioned that its expansion will likely not be that fast or simple.
It is after all a whole new market.
But he said the support of the WA and Commonwealth Governments for potash projects was important for the infant sector.
“The market dynamic is compelling, but we’re not going to flood the market any time soon that’s for sure,” he said.
“I think both at a Commonwealth level and at a State level we’ve got great support and recognition that this is a wonderful new addition to the mining industry in WA.
“It is certainly needed when an industry is in its infancy.”