Category Archives: potash
Technology set to unleash mining innovation – Anglo’s O’Neill
16th August 2017 BY: MARTIN CREAMER
CREAMER MEDIA EDITOR
JOHANNESBURG (miningweekly.com) – In the next ten years, technology is set to unleash a wave of mining innovation, with the sweet spot centred on changing the thinking around orebodies and processing plants rather than much-spoken-about automation.
“Our focus has changed from hunting technologies to hunting value,” Anglo American technical director Tony O’Neill told Creamer Media’s Mining Weekly Online in an exclusive interview.
Three-dimensional metal printing, nonexplosive breakage of rock and microwave preconditioning of rock, as well as medical imaging equipment, are finding rapid application in mineral mining and processing.
The word in the industry is that mining companies that embrace the new era will be successful and the ones that do not will ultimately not survive. Anticipated are mines with footprints that can more readily coexist alongside a community in much the same way as farming.
The good news is that pathways are already starting to develop that change the current mining and processing paradigm.
Technologies are being reconfigured to make mining and processing far more precise, which offers massive potential reward.
Currently, much larger volumes of waste are brought to surface, compared with the scenario more than a century ago. This is because, outside of safety improvements, old methods are still being used today. For instance, in 1900, to obtain 40 kg of copper, 2 t of material had to be mined using 3 m3 of water and 10 kWh of energy, compared with currently having to mine 16 times more material, using 16 times more energy and drawing on double the volume of water.
“It’s risen at such a rate that it’s becoming unsustainable,” O’Neill commented to Mining Weekly Online.
While mining was, in the past, content to be a research and development laggard, other industries were not – and they shot ahead on the technological front, proving up technology that is now available off the shelf for mining to implement.
A successful pilot plant is already pointing the way for the more widespread introduction of coarse-particle recovery, which brings considerably larger-sized particles to surface and slashes water use.
Moreover, with the maturing of robotics technology, research is also being conducted into the introduction of swarm robotic mining, involving the use of small robots that will bring ultra-precision to a hugely wasteful industry.
As more precise mining methods gather momentum, those 40 kg of copper used to illustrate mining’s deteriorating position may one day be mined without any waste at all.
Coarse-particle recovery and advanced fragmentation (using smart blasting technologies) are good examples of putting existing technologies into new configurations to deliver value right now.
None of the technologies used is unproven, but what Anglo has managed to do is configure them in a way that adds immense value, with minimal additional capital investment.
While technology will have to be honed specifically for mining at some stage, a surfeit of technologies is ready for instant application.
“It’s more about a mindset change than having to make massive investments,” Anglo American technology development head Donovan Waller added to Mining Weekly Online.
Much of the improvement is being driven by data science and the modern world’s ability to analyse increasing volumes of data to a very high degree.
Virtually all the technologies needed have come of age; one of the biggest being the stabilisation of information technology, in which other industries have tended to advance much faster than the mining industry. These other industries include consumer electronics, manufacturing, automotive engineering and the pharmaceutical sector.
The coarse-particle recovery process captures coarse particles that are not recoverable using conventional flotation.
By needing to grind to only 500 micron instead of 170 micron, capacity is increased. Less energy is required in the crushing and grinding and water is more easily extracted from the larger particles and then recycled, significantly reducing the need for fresh water. The extraction of interstitial water results in a dry product, which can be dry-stacked, ultimately eliminating the need for tailings dams.
In copper, coarse-particle flotation has the potential to change the cost curve of the industry by allowing for 30% to 40% more throughput at a recovery loss of 2% to 3%, a 20% energy saving and 30% to 40% less water.
This is already a significant achievement for Anglo American in copper, and the company is hopeful of migrating it to other commodities, including platinum in South Africa, where testwork is still at an early stage.
If, for example, platinum ore can be pre-sorted in advance and be presented at a grade of 10 g/t instead of 4 g/t, output can be increased by two-and-a-half times from the exact same capital invested.
SWARM ROBOTIC MINING
Swarm robotic mining descales mining to make it much more precise, mimicking the actions of a swarm of locusts devouring a field or an army of ants working independently to execute tasks.
The technology envisages highly selective mining of ore types linked to real-time algorithms across a broad spectrum that includes constraints in energy, prices and associated issues.
As many people as possible are taken out of harm’s way in a remotely controlled environment.
Small operational teams will communicate with each other, without the need for a big-brother view from the surface that controls each of those small operational elements independently in self-learning operations.
Currently, the industry spends a lot of time adding water to its processes and even more time trying to get the water out afterwards.
A pathway has been developed to end up with a waterless mine through the adoption of a closed loop, using only a fixed amount of water that is then recycled time and again. Anglo already recycles or re-uses more than 60% of its water requirements.
Ultimately, the aim is to arrive at potentially chemical means that allow for the liberation of particles without having to add water to them, to arrive at a waterless process.
SUN, WIND, GRAVITY AND SMALL, GREEN NUCLEAR
In terms of energy, the focus is on using renewables for energy self-sufficiency.
The solutions will be a combination of sun and wind. As the sun does not shine at night and the wind does not always blow, other energy forms, including gravity, will take advantage of the mining sector having depth as one of those solutions.
Ultimately, nuclear may be incorporated should it become “greener”, smaller and more modular, as is expected.
Instead of spending billions to build one big plant, small modular plants will be built and scaled up quickly, with the lifespan of the modules being influenced by the next step up in technology.
Mines will move away from using the same technology for long periods of time and outlaying large capital expenditure on plants that last for 50 years and more.
Smaller, modular, cheaper units will allow for technology upgrades every five years, providing scalability as well as the opportunity to ramp up on new technology that has arisen.
Although mining is not an industry that has been used to technological change, there is no reason why it should not, from now on, accelerate advancing technology quickly, as other industries do.
“Our FutureSmart Mining programme is about far more than technologies alone. It is end-to-end innovation, in its broadest sense, addressing all aspects of sustainability for the business – safety, health, the environment, the needs of our communities and host governments, and the reliable delivery of our products to customers. Those that innovate and are agile will thrive in this industry. That is mining’s new future.” O’Neill concluded.
Miners Built on Wildcat Culture Now Want to Share the Risk
By Thomas Biesheuvel
August 10, 2017, 5:00 PM CST August 11, 2017, 2:07 AM CST
- Chastened by metals slump, new projects idle awaiting partners
- Industry made by swashbuckling gamblers ‘has lost its nerve’
Swashbuckling gamblers abound in the mining business, where billions are spent searching for mother lodes in some of the most inhospitable places on the planet. But a prolonged slump in metals and big losses on earlier solo projects are turning top producers into risk-avoiding wallflowers.
“The mining industry has lost its nerve,” said Mark Bristow, chief executive officer of Randgold Resource Ltd., a London-listed producer of gold in Africa. “The new fad in town is joint ventures. It’s very strange if you’re a major miner. They should be comfortable in their ability.”
At a time when prices are recovering — helping to make new projects viable again — metals producers including Anglo American Plc, BHP Billiton Ltd. and Rio Tinto Groupare seeking partners to share the investment risk rather than going it alone as they have in the past. While the more-cautious approach is a consequence of the near-death experience of the 2015 commodity crash, it could limit the payoff for shareholders during a metals rally.
The shift to more conservative financing comes as the industry confronts a core dilemma: the richest mines in the safest or most-accessible places have mostly been found and built. That means companies are increasingly looking to develop ore bodies that are of lesser quality and may be in higher-risk countries.
“They have to spend more to mine less,” said Rob Crayford, a fund manager at CQS Asset Management Ltd.’s New City Investment Managers in London. “A lot of the projects out there aren’t that great.”
Still, while prices remain well below their post-recession peaks, they’re up enough in the past year or so for companies to consider dusting off expansion plans they shelved during the glut. The London Metal Exchange index of six base metals, including copper and aluminum, has rallied almost 50 percent from a low in January 2016. Gold is heading for the biggest annual gain since 2010, and iron ore has almost doubled from the all-time lows reached in 2015.
S&P Global Market Intelligence estimates that exploration drilling for metals has risen for five straight quarters, off to its fastest start to a year since 2009, and there are signs the pace is accelerating.
Anglo American, a London-based producer that has been mining metal for more than a century, says its No. 1 new project is the giant Quellaveco copper deposit in Peru. But the company wants a partner before development starts, and says it will seek joint ventures for all future new mines, known as greenfield developments.
Melbourne-based BHP, the world’s largest mining company, is set to commit to the $13 billion Jansen potash mine in Canada after years of study, but says it wants to bring in a partner to help share the risk. London-based Rio Tinto also is seeking partners for future developments, while Glencore Plc says it won’t build any new mines at all.
“I’m not excited about greenfield,” said Chief Executive Officer Ivan Glasenberg, noting that over-development in years past created the oversupply and low prices that led to huge losses for the industry. “Unless something changes in the world, I don’t see Glencore doing greenfield for awhile.”
Acquisitions are more likely, Glasenberg said, because it doesn’t make sense to “bring new tons into the market which cannibalizes your existing production.”
The industry is still smarting from the self-inflicted wounds. Anglo’s giant Minas Rio iron-ore mine in Brazil cost $14 billion to buy and build, but it became an expensive mistake as prices plunged by more than half. Barrick Gold Corp., the largest bullion producer, spent $8.5 billion on the Pascua Lama project high in the Andes that has been stalled since 2013. The company recently signed a deal with China’s Handong Gold Group that may lead to a joint venture on the project.
It’s not just new mines that are making the industry more cautious. Some companies made investment mistakes that compounded the losses when prices fell. BHP has said its $20 billion spending on shale deposits was a mistake, while Glencore took a $7.7 billion writedown on its Xstrata Plc takeover. Rio Tinto bought coal assets in Mozambique for $3.1 billion that it later sold for $50 million.
To be sure, joint ventures aren’t a new idea. The giant Escondida copper mine in Chile is operated by BHP but also owned by Rio Tinto and Japanese companies including Mitsubishi Corp. But the push to share more of the risk is a marked contrast to the expansion during the previous bull market.
Still, the more swashbuckling method of going solo on projects may be the most beneficial for shareholders, according to Randgold’s Bristow, whose company built all of its three mines from scratch, including a joint venture with Johannesburg-based AngloGold Ashanti Ltd.
“Greenfield is absolutely where you should put all your money,” Bristow said. “But a lot of these companies are still dealing with their over-exuberant growth during the super cycle.”
Mining industry can now predict opposition to projects before it’s too late
August 7, 2017
It’s sounds too good to be true, but a new company is proving miners they can foresee opposition or any other form of social conflict related to their projects, before they even attempt going through a licencing process.
Chalkstone, a UK-based company founded by Donald Bray, a political anthropologist and academic at the University of Cambridge, bases its success in a very unique method, applying what’s known as “granular social intelligence.”
“We take a systemic approach and mix methodologies, combining big data and quantitative analysis with ethnography, qualitative interviews and focus groups, all of which help us dig deep into particular issues and accurately define the social stance of a target group,” Bray explains on the phone from his home in Paris.
“We are not interested if the community is, in any way, being taken advantage of” — Donald Bray.
Before going further, he’s quick to note that the goal of his company is not just to help mining companies get what they want, but to assist them in building mutual trust with the groups living in the areas in which they operate.
“We are not interested if the community is, in any way, being taken advantage of,” he says. “Our due diligence runs in a number of different directions.”
The expert, with more than 15 years of experience working across the globe, particularly in conflict zones, is not saying mining companies are the “bad guys” in the story.
“It’s not that firms don’t care about CSR [corporate social responsibility] or don’t want to invest in it. The problem is that most tools currently available don’t really help them grasp the human aspect of their projects,” he says.
Donald Bray, Chalkstone founder.
Half of all risks faced by extractives companies are non-technical ones, which in turn account for nearly 75% of all projects delays. “For a mid to large sized mining company, the costs of these delays (socio-political and community risks) can add up to some $20 million a week,” says Bray. “This is huge and it deserves far more attention than mere box-ticking or forms of corporate philanthropy.”
Chalkstone already has a known success story under its belt. After an intensive study on a ruby mine and a copper deposit in Afghanistan, applying counter-insurgency tactics used by deployed troops, Bray was hired in 2015 by Gemfields (LON:GEM), the world’s largest emerald and ruby miner. At the time, the precious gems firm had committed to building an emerald mine in Colombia.
Part of Chalkstone’s work to help Gemfields enter the market was the creation of a communications platform based in text messaging, which allowed the mining company and local communities to talk freely to one another.
Named by the community as “Suna Verde” (meaning “Green Pathway” in the Muisca aboriginal language), the system kept locals updated on everything from job-training initiatives to when the “health brigade” (a team of doctors and nurses that travel around the countryside) would be in each village. Soon, says Bray, Suna Verde was rivalling the radio as the region’s main source of news and other information.
“The experience showed us that communities want jobs, roads, hospitals and clinics, schools, and any other benefit offered by mining companies, but they want to be actively involved in their decisions. They don’t want to be just beneficiaries of someone else’s goodwill,” says Bray. “This is one of the most important lessons I’ve learned and which is transferrable to almost any community in the world.”
During the first months of work for Gemfields in Colombia, Chalkstone warned the company there was opposition brewing for another international mining firm in the region. Only four months later, that miner was hit by protests and even armed attacks.
“When you invite thousands of voices into a conversation, you need to be prepared for dissenting opinions (…) By listening to all of them, you’re able to get in front of the risks. That’s what happened in Colombia… we were able to see things that you wouldn’t normally see and we told Gemfields about it.”
While Gemfields decided in May to leave Colombia and Sri Lanka to focus on its African projects, the fact the company didn’t face hostility from community members is a testament to Chalkstone’s work, says Bray.
The company, currently involved in mining and oil and gas projects in East Africa, as well as a new venture in Colombia, believes its novel approach could also be useful to investors.
“Given that nearly 66% of shareholder value in a junior miner is linked directly to socio-political and community risks, according to some calculations, investing in understanding the social environment in which a miner will operate shouldn’t be an afterthought or something people turn their minds to only when times get tough,” Bray warns. “Trust is valuable,” he concludes.
These are a few examples of conflicts an approach such as Chalkstone’s could have prevented:
AUGUST 1, 2017 / 9:36 AM
Brazil regulator approves Mosaic purchase of Vale fertilizer unit
SAO PAULO (Reuters) – A Brazilian regulator has approved the acquisition of miner Vale’s (VALE5.SA) fertilizer unit by U.S.-based Mosaic (MOS.N) without restrictions, according to a notice in the official government newspaper published Tuesday.
Mosaic agreed to buy Vale Fertilizantes in December for $2.5 billion in a deal that makes Vale the largest shareholder in the U.S. company while raising money to help the Brazilian miner to achieve its debt reduction goals.
“This acquisition gives Mosaic the opportunity to benefit from the growing Brazilian agriculture market. … For Vale, the deal guarantees an important capital injection and a significant minority position in the global fertilizer business,” the Administrative Council for Economic Defense (CADE) said in its published opinion approving the deal.
Vale Fertilizantes has capacity to produce 4.8 million tonnes of phosphate fertilizers and 500,000 tonnes of potash, including five phosphate mines in Brazil, four production facilities and a Brazilian potash project.
Through the transaction, Mosaic also will buy the Kronau potash project in Canada and Vale Fetilizantes’ 40 percent stake in the Miski Mayo phosphate mine in Peru.
Mosaic opted not to buy the Rio Colorado potash project in Argentina and the Cubatão nitrogen and non-integrated phosphate venture, CADE said.
Vale will have a 11 percent stake in Mosaic after the conclusion of the deal and may appoint two members of Mosaic’s board of directors.
Reporting by Luciano Costa; Writing by Jake Spring; Editing by David Gregorio
Supreme Court of Canada confirms First Nations have no veto power over resource projects
By Nelson Bennett, Business in Vancouver
July 28, 2017, 2:45 p.m.
Image: Kinder Morgan Canada
Just days after the new NDP government said it would work to implement a declaration that ostensibly gives First Nations in B.C. a veto over projects like the Trans Mountain pipeline expansion, the Supreme Court of Canada ruled no such veto exists.
“Overall, the decisions are positive for project development in Canada,” said Robin Junger, an expert in aboriginal law for McMillan LLP and former head of the B.C. Environmental Assessment Office.
On one hand, David Eby, the NDP’s new attorney general, confirmed last week what Junger has previously said to be the case – that his government doesn’t have the legal authority to deny permits for the pipeline expansion.
Those are statutory decisions made by civil servants, not political decisions to be made by cabinet ministers.
On the other hand, last week Premier John Horgan issued a mandate to Scott Fraser, minister of Indigenous Relations and Reconciliation, to work with First Nations “to establish a clear, cross-government vision of reconciliation to guide the adoption of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).”
That declaration has a clause that states that indigenous people have the right to “free prior and informed consent” on development projects within their asserted territory.
On the surface, that sounds like the NDP would be handing the Tsleil-Waututh of Burrard Inlet a veto, since they deny the federal government’s and Kinder Morgan Canada’s right to expand the pipeline in their territory – the Burrard Inlet in Burnaby.
But as the federal Liberals discovered when they too promised to implement UNDRIP, actually giving it legal force would require a constitutional amendment, which is why the federal Liberals abandoned it.
Two Supreme Court of Canada decisions issued on July 26 made it abundantly clear that, while the federal government has a duty to consult, that does not mean that First Nations can veto a project.
In one ruling, the Supreme Court of Canada ruled that regulators like the National Energy Board (NEB) can represent the federal Crown in executing the duty to consult First Nations, but that those consultations must be real, not lip-service.
In the Clyde River Inuit case, the Supreme Court ruled that the NEB has the authority to represent the Crown in executing its duty to consult, but that, in that particular case, it had failed to do so properly. The court ruled the NEB’s consultation failed to properly address the Clyde River Inuit’s concerns.
The other case, involving the Chippewas of the Thames First Nation decision, is particularly relevant to the Trans Mountain pipeline expansion. In that case, the court ruled that the consultation with the Chippewas had been adequate.
The Chippewas were objecting to a reversal and expansion of a pipeline owned by Enbridge. The Supreme Court ruled against the Chippewas in that case and in doing so affirmed that, provided consultations are adequate, First Nations don’t have the legal authority to stop developments in their territory.
“The duty to consult does not provide a ‘veto’ for indigenous peoples over Crown decision,” Blake, Cassels & Graydon LLP explains in a legal brief on the two cases.
So what does that mean for the NDP’s promise to implement UNDRIP? Junger said it is clear that it has no legal force.
“This is the law,” Junger said. “No elected person can change the law by statements.”
“Courts have interpreted Section 35 of our Constitution as saying there’s no veto. So I think don’t any government would have the power, even by legislation, to make that change. It would have to be a constitutional amendment. You can’t make it law by saying you endorse it.”
‘We want to see this succeed’: Karnalyte plans to pursue Wynyard potash mine despite CEO’s abrupt exit
ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: July 28, 2017 | Last Updated: July 28, 2017 6:21 PM CST
The site of Karnalyte Resources Inc.’s proposed potash mine near Wynyard.
KARNALYTE RESOURCES INC.
The collapse of a $700 million financing agreement and the unexpected departure of its founder and longtime president have not halted a Saskatoon-based junior miner’s plan to secure the funds needed to build a potash mine near Wynyard, according to its new interim chief executive.
Todd Rowan, who was earlier this month appointed to lead Karnalyte Resources Inc. as it looks for a permanent CEO, said while he could not disclose details of the company’s plans, it is “working towards” building the proposed 625,000-tonnes-per-year solution mine about 175 kilometres west of Saskatoon.
“We need financing; that’s the only hurdle left,” said Rowan, who also sits on Karnalyte’s board of directors. He declined to comment on whether the company will seek a new deal with its former financing partner, Gujarat State Fertilizer & Chemicals Ltd. (GSFC), or look elsewhere for the money.
GSFC representatives did not immediately respond to a request for comment on Wednesday.
Rowan said he also could not comment on the abrupt exit of Robin Phinney, who founded Karnalyte in 2007 and championed its project near Wynyard before leading a group of concerned shareholders after the company’s board decided to suspend work at the site in 2015. Reached by phone, Phinney, whose exit was announced last month, also declined to comment.
Karnalyte’s plan to build the mine, the first phase of which is expected to cost $789 million to build, began to move quickly last year after it announced an agreement in principle to finance the project with GSFC. Three years earlier, the Indian company had invested $44.7 million into Karnalyte.
Phinney said at the time that the deal — which involved GSFC underwriting the mine’s construction and buying 56 per cent of its production for 20 years in exchange for a temporary 51 per cent voting stake in the company — meant he could have “dirt flying” by late 2016. That changed last summer when the companies said they had not been able to reach an agreement.
Wynyard chief administrative office Jason Chorneyko said while it’s unlikely that Karnalyte’s plan to forge ahead will attract investment to the town of 1,800 until a mine is built, the prospect of temporary construction jobs and permanent mining positions would be significant.
“Any news of this type is good news,” he said.
Karnalyte is not the only junior miner planning to build a new potash mine in Saskatchewan. Vancouver-based Encanto Potash Corp. is working toward establishing a mine on Muskowekwan First Nation, while a new joint venture aims to have a mine near Tugaske operational sometime in 2019.
“We want to see this succeed,” Rowan said.
Potash Market Rebounds as Low Prices Drive Sales in Asia
July 27, 2017, 4:10 AM CST July 27, 2017, 4:14 PM CST
- Potash Corp. raises industrywide global shipment forecast
- ‘Robust demand’ seen as export volumes climb in first half
The global potash market is rebounding from a decade of weakness as cheap prices for the crop nutrient help to drive sales in India and China.
Potash Corp. of Saskatchewan Inc. raised its global shipment forecast for the industry to 62 million to 65 million metric tons for 2017, up 1 million tons from an earlier projection. A good monsoon and increased acreage will help to boost sales in India while exports to Latin America are poised to reach a record, the company said in a statement Thursday as it unveiled better-than-expected second-quarter earnings.
Shipments to China, the largest market, are seen rising to as much as 16.5 million tons. Canpotex Ltd., the joint venture handling overseas potash sales for Potash Corp. and its two largest North American rivals, has said in the past week that shipments to China may climb 31 percent in 2017 and that it has signed supply contracts at prices $11 a ton higher than last year.
“For the second half of 2017, we anticipate rising consumption,” Potash Corp. Chief Executive Officer Jochen Tilk said on an earnings call. “Affordability will continue to underpin strong potash demand.”
Potash prices have been in a downward trend for a decade due to excess production capacity. Lower crop prices cut farmer spending, undermining demand for the commodity, which strengthens plant roots and boosts drought resistance.
Potash Corp., which plans to merge with Canada’s Agrium, has reduced its own production capacity to help balance the market. Sales volumes tend to rise amid low prices, said Atlantic Equities analyst Colin Isaac, and rising shipments may not be a sign of any structural demand change.
“It probably just reflects that prices are lower,” Isaac said by phone. “That’s been the trend.”
In the U.S. corn belt, potash spot prices have gained 23 percent since hitting a nine-year low in July 2016, according to Green Markets data. Sales volumes usually get a boost once a Chinese settlement is reached, said Jason Miner, a Bloomberg Intelligence analyst.
“Demand is fairly solid,” Edward Jones & Co. analyst Daniel Sherman said by phone. “Potash itself is looking like we probably bottomed in 2016.”
Saskatoon, Saskatchewan-based Potash Corp., reported second-quarter net income of 24 cents a share, exceeding the 19-cent average of 10 estimates compiled by Bloomberg. Sales rose to $1.12 billion from $1.05 billion a year earlier, beating the $987 million average estimate. The company reiterated its full-year forecast for net income of 45 cents to 65 cents a share. The shares rose 1.2 percent to settle at C$22.22 in Toronto.
In September, Potash Corp. and Agrium agreed to an all-share merger to create the world’s largest crop-nutrient supplier. The companies expect to generate cost savings of $500 million a year following the completion of the deal, which they see happening late in the third quarter. The merged company will be called Nutrien Inc.
Potash Corp beats revenue forecasts as sales, prices rise
AHMED FARHATHA AND ROD NICKEL
Published Thursday, Jul. 27, 2017 7:11AM EDT
Last updated Thursday, Jul. 27, 2017 9:05AM EDT
Canada’s Potash Corp of Saskatchewan reported bigger-than-expected revenue on Thursday as it sold more potash at higher prices compared with a year earlier, marking a slow recovery in the oversupplied market.
Potash prices have rebounded modestly since last year but remain low, under pressure from bloated global capacity and soft crop prices.
The Saskatoon, Saskatchewan-based fertilizer producer’s revenue rose 6.4 per cent to $1.11-billion (U.S.), beating the average estimate of $1.09-billion.
Potash Corp’s results were mostly in line with expectations, but the company’s second-half prospects may not be bolstered by improving potash market conditions, disappointing some investors, Citi analyst P.J. Juvekar said.
The company left unchanged its guidance for full-year profits of 45 cents to 65 cents per share.
U.S.-listed shares of the company rose 1.7 per cent in pre-market trading to $18.
Potash demand this year has been robust, helped by low prices and brisk offshore sales by Canpotex Ltd, the export company owned by Potash, Agrium Inc and Mosaic Co . Canpotex signed supply contracts this month with Chinese buyers at a higher price.
Potash Corp, the world’s third-largest potash producer, forecast global demand of 62 million to 65 million tonnes this year, up from an earlier forecast of 61 million to 64 million tonnes.
It said potash sales jumped 11 per cent to 2.4 million tonnes in the second quarter.
The average realized price for potash rose to $174 per tonne from $154 per tonne a year ago. The company is also whittling down its costs selling the crop nutrient, as it has ramped up production at its expanded lowest-cost mine at Rocanville, Saskatchewan.
Potash said it expects its merger with rival Agrium to close late in the third quarter. The deal, which still requires U.S. and Canadian regulatory approval among others, would combine Potash Corp’s fertilizer capacity, the world’s largest, with Agrium’s farm retail network, North America’s biggest.
The new company would be known as Nutrien.
Potash’s net earnings rose to $201-million, or 24 cents per share, from $121-million, or 14 cents per share, a year earlier.
On an adjusted basis, it earned 16 cents per share, missing analysts’ average estimate by 2 cents, according to Thomson Reuters I/B/E/S. Weaker prices for nitrogen and phosphate fertilizers weighed on results.
BHP to grow potash business to size of iron ore — report
Jun. 5, 2017, 11:14 AM
BHP expects to complete the first phase for its massive Jansen potash mine by 2023.(Image courtesy of BHP)
BHP (ASX, NYSE:BHP) (LON:BLT), the world’s largest mining company by market capitalization, is considering to grow its potash business to the size of its iron ore division, but only under “certain circumstances.”
Speaking to Japanese newspaper The Nikkei, chief executive Andrew Mackenzie said that as part of the company’s recently announced restructuring, BHP expects to reinvest what it gets for its US shale gas assets into potash.
BHP is currently developing its Jansen potash mine in Canada, which would be the company’s biggest single investment ever.
The results of this strategy, however, won’t be immediate, he warned: “It’s taken us 50 years to create today’s iron ore business. It will be another 50 years to create a potash equivalent. So you have to start somewhere,” Mackenzie said.
And that starting place seems to be Canada’s Saskatchewan province, where the world’s third largest iron miner is currently building its massive Jansen potash mine.
To date, BHP has committed a total investment of $3.8 billion to move Jansen into production. From that total, $2.6 billion have been set aside for surface construction and the sinking of shafts, though analysts predict the total cost will be close to $14 billion.
Mackenzie said last month it was looking at a phased expansion of Jansen, which is projected to produce 8 million tonnes of potash a year or nearly 15% of the world’s total.
He added the company could seek approval from the board for such expansion as early as June 2018, with production beginning in 2023.
Prices for the crop fertilizer ingredient, however, are not favourable — they are still hovering around $230 a tonne, less than half what they were only five years ago.
Besides, BHP’s iron ore business brings in about $9 billion a year, which doesn’t look like an easy target to match by any other division, particularly by potash, given current prices.
But the company is looking long-term and has repeatedly stated it believes rising demand for fertilizer in growing nations, particularly China and India, will lead to a long-term price increase for the commodity.
Mosaic joins chorus calling BHP’s Jansen potash mine plan unwise
July 24, 2017
BHP expects to complete the first phase for its massive Jansen potash mine by 2023. (Image courtesy of Shermco Industries Canada.)
Mosaic (NYSE:MOS), the world’s largest producer of finished phosphate products, became the latest potash sector actor to cast a doubt on BHP’s recently announced plans to speed up the development of a giant potash mine in Canada.
The US miner said Monday that for BHP to spend another $4.7 billion, prices for the fertilizer ingredient would have to at least double from currents levels or the investment would simply not make any sense, The Australian reports.
“I think it is a less than high probability at this stage (but) you can never say what people will do,” Mosaic chief executive Joc O’Rourke said according to the paper.
His view is in line with BHP’s activist investor Elliott, which last week attacked the company’s decision to grow its potash business to the size of its iron ore division, mainly by moving Jansen into production.
BHP has committed so far a total of $3.8 billion for Jansen, but board needs to approve another $4.7 billion investment to move mine into production.
Sydney-based Deutsche Bank AG analyst Paul Young also questioned BHP’s bet on potash, telling Bloomberg earlier this month that Jansen was “highly contentious topic and project.” He noted the market has continued to be severely challenged, adding it may not improve for at least five years, as there is plenty of spare capacity in the industry.
While BHP board will decide whether to build the mine only next month, the world’s largest miner has been paving the way for it. So far, BHP has committed a total investment of $3.8 billion for the potash project. From that total, $2.6 billion have been set aside for ongoing surface construction and the sinking of shafts.
Chief executive Andrew Mackenzie said in May the company was looking at a phased expansion of Jansen, which is projected to produce 8 million tonnes of potash a year or nearly 15% of the world’s total.
Mackenzie added the company could seek approval from the board for such expansion as early as June 2018, with production beginning in 2023.
BHP claims investing in potash is thinking ahead, and it has repeatedly stated it believes rising demand for fertilizer in growing nations, particularly China and India, will lead to a long-term price increase for the commodity.
“The basic rationale for rising potash consumption is quite simple,” wrote last week BHP’s potash specialist Paul Burnside. “Not only is the total population continuing to grow, but at least three billion people are expected to join the global middle class by 2030.”
Prices for the crop fertilizer ingredient, however, are not favourable — they are still hovering around $230 a tonne, less than half what they were only five years ago.