This WA SOP player is on the cusp of commercial-scale production. Here’s why that’s a big deal
Currently there is no Australian production of any type of potash, which is a vital fertiliser for crop production globally.
But WA-based Kalium Lakes (ASX:KLL) has its sights set on first production of sulphate of potash (SOP) from its Beyondie project in September.
This is a pretty big milestone if they hit it, not only because no one else is in production yet but because SOP is chloride-free and attracts a nice price premium – currently more than A$850-875/t.
Basically, a lot of crops like fruits, vegetables and tree nuts are chloride intolerant and the demand for seaborne SOP from Australia is only expected to grow as countries seek food security and higher crop yields.
Last year Australia consumed around 485,000 tpa of MOP and SOP and Kalium is pretty confident that an opportunity exists to capture the Australian supply market for SOP with opportunities to extend into Asia and the sub-continent.
And the company has already stockpiled a tidy 90,000 tonnes of potassium salts – equivalent to around 9,000 tonnes of SOP production.
Harvesting operations and potassium salt stockpiling is ongoing, with several other ponds ready and available for harvest.
To put this in perspective, the company says the potassium salt, both harvested and ready for harvest, accounts for around the first six months of SOP production during the ramp-up period.
“Having installed a robust network of brine supply and evaporation ponds, we continue to reap the bounty of large volumes of potassium salts above the plant feed cut-off grade, which are harvested and delivered to the ROM pad,” CEO Rudolph van Niekerk said.
“With this ample supply of potassium salts, we have expanded our stockpile area and will soon be ready to move from commissioning to production.
“The operations team at the Beyondie SOP Project is working closely with the projects team through each of the separate commissioning stages of the SOP purification plant.
“We are entering the final phase of the project and, with several areas of the plant ready for water commissioning, there are only a couple of months to go before commencement of SOP production.”
Now the company just needs to finalise off-take and marketing plans for additional SOP sales under its 120ktpa SOP expansion project, as well as finalise the expansion study which aims to accelerate an increase in SOP production capacity off the back of increasing SOP prices.
It’s worth noting that Kalium’s stage one production is already tied up in a 10-year offtake deal with German fertiliser king K+S, which currently supplies more than 60 per cent of the Australian and New Zealand SOP markets.
The company is the next in line to production, having taken major strides forward during the June quarter with the handover of the process plant and the granting of EPA Part IV approval for its Lake Way project.
However, the company has since announced it will be implementing a revised ramp-up strategy that involves suspending the initial plant feed program, following the processing of the first 90,000-110,000 tonnes of harvest salts.
The company was targeting a staged ramp-up to 245,000 tonnes per annum by the fourth quarter of FY22, but that forecast has been reduced and SO4 has stated it will require further funding before the end of 2021 to continue operations at Lake Way.
The company’s Lake Way Potash project interestingly includes the directly adjoining downstream continuation of the main basal channel that SO4 is currently developing.
GTE was granted a 26D licence by the Department of Water for ‘construction of a bore’ in the June quarter – which essentially permits the company to construct a network of up to 40 exploratory bores, 20 monitoring bores and 10 production bores across the project footprint.
In early July 2021, a passive seismic survey commenced on the project with results pending.
The Creasy-backed company released its FEED results in April which showed its Lake Wells project would produce 170,000 tpa output – with 150,000 tpa already under binding take or pay offtake agreements.
APC reckons the project is positioned as the lowest CO2 emitting SOP project development in Australia, enhancing global decarbonising of the fertiliser supply chain with K-BriteTM SOP to replace energy-intensive Mannheim SOP use in key markets.
Plus, a renewable hybrid power solution is expected to generate a base-case 44% renewable energy penetration (REP) rate with a pathway to 60% REP through battery energy storage system build-out.
In the September quarter the company plans continued development of the Western Borefield and the start of civil earthwork program for the crystalliser pond network.
The Western Australian Environmental Protection Authority (EPA) recently recommended the company’s Mardie project to the WA Minister for the Environment and the company has already awarded around $129 million worth of contracts this year.
BCI envisages Mardie will produce 5.35 million tonnes of salt and 140,000 tonnes of SOP each year when it’s operational.
The first of two SOP pilot campaigns have been completed, with the second round scheduled for late 2021 to assist with flowsheet finalisation and generate additional samples for test work by potential offtake customers.
The company reckons its Mackay potash project will be the world’s lowest cost producer of SOP with a forecast total cash cost of US$159 per tonne.
The company is targeting 450,000 tonnes per annum of production from the project, which has an initial mine life of 40 years.
During the June quarter, the company signed a binding offtake agreement with Sinochem Fertilizer Macao Limited for the supply of 150,000 tpa of SOP for sale and distribution in China.
It’s the largest offtake volume for any Australian SOP project and has a 10-year term with pricing negotiated quarterly based on a Chinese SOP price index quoted by an international marketing group.
Next on the cards for Agrimin is a final investment decision.
Recently the company released the maiden inferred mineral resource for its Lake Throssell project of 14.2 metric tonnes of drainable SOP at 4,638 mg/L potassium and updated the exploration target to 2.6-9.4 Mt of SOP.
The completion of the Scoping Study for Lake Throssell and installation of test production bores to improve the resource confidence level of the basal aquifer units is next in the work order for Trigg.
This will allow it to progress the economic evaluation of the project to the next stage – and commence initial discussions with potential off-takers and financiers.
Reward has recently recognised the name change of Lake Disappointment to the Martu Traditional Owners’ title of Kumpupintil Lake, which 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).
Plus, the company was also awarded major project status by the Federal Government.