Potash Basics Mark Arundell IMEx Consulting

Transcription

1 Potash Basics Mark Arundell IMEx Consulting All data in this presentation are the intellectual property of IMEx Consulting (except where obtained from public domain) and must not be reproduced, copied, shared or forwarded in any form without the express permission of IMEx Consulting

2 Potash What is Potash? What is it used for & why its important Supply demand metrics Current operations globally Known projects coming on stream Key Project metrics what grade is good/bad, capex etc Proactive Investor Forum July 16th 2

3 The IMEx Group - Experience Exploration Projects and Regional Studies Elk Point Basin Paradox Basin Carlsbad Zechstein Maritimes Michigan Catalonia Khemiset Belarus Uralian North Caspian Afghanistan Nagaur (India & Pakistan) Amazon Sergipe Atacama Sicily Danakil Gabon Congo Oman Canning Carnarvon Udon Thani Adavale Neuquen Lake Auld Timaru IMEx Office 3

4 What s Potash? The mineral (K) is one of the three main macro nutrients required by plants, along with nitrogen (N) & phosphate (P) Potash helps improve a plant's disease resistance crop quality increases yields Only potassium fertilizer source No practical substitutes 4

5 Why Potash? It s a Growth Story!! 5

6 Why Potash? 6

7 Why Potash? Rio Tinto

8 Why Potash? Potash Corp $US Jul 15 US$ : BHP US$ US$4.9Billion US$2.7Billion US$ MMT 18.1 MMT PCS 2007,

9 Supply Demand Metrics Demand Global Development Rising income better diets; demand for high quality fruit, vegetables & meat Increase production Fertiliser has a key role PCS

10 Supply Demand Metrics Shift to Urban in Dev countries +80M people per year Asia & Africa 2014 : ½; 2050 : 2/3 Econ Grow, inc Food Fruit, veg + protein Brazil, China, Indo - now India, Africa - begin PCS

11 Supply Demand Metrics Pressure to inc. prod on existing land Less arable land Fertiliser essential to crop yield Yield growth PCS

12 Supply - Where Potash? PCS

13 Production and Demand PCS

14 PCS offer for K+S BHP poison pill? Gain control over undisciplined tonnes Regulators will prevent Volume over price is inevitable Market : K&S Brazil PCS New Brunswick (non Canpotex) Brazil ScotiaBank

15 PCS offer for K+S Largest export market Brazil USA China India An aside. Producers are Industrials on NYSE not Miners PCS, IPI, MOS Dividend Yield Bloomberg + Capital IQ 15

16 Supply Only 12 countries produce potash. Canada, Russia, Belarus & Germany - +75% Seven companies control >80% of global supply: Potash Corp of Saskatchewan, Mosaic Co, Agrium Inc, K+S, Uralkali, Belaruskali & Israel Chemicals Two marketing conglomerates did control >68% exports. Canpotex - Potash Corp, Mosaic and Agrium Belarussian Potash Co - Uralkali and Belaruskali. 16

17 Supply/Demand Balance Fertecon, CRU, IFA, PCS 17

18 Potash Mining Solar : Dead Sea, Utah, China Underground : Conventional & Solution Conventional : Room & Pillar <1200m Saskatoon, SK, Canada Solution: ~2,000m Regina, SK, Canada 18

19 Conventional Saskatoon Southern Saskatchewan Potash Mines & Depth to Potash Solution Regina BHPB 19

20 Conventional Mining Depth : 300m m Thick Salt : 120m - >150m Room & Pillar m high; 10-20m wide; 70% recovery (30% pillar) Drill & Blast, road headers or continuous miners Salt : 30cm bottom; 1-2m roof Prairie Evaporite Strong impermeable rock 10-15m above Not shale, sand, etc. 20

21 Conventional Mining 21

22 Room & Pillar Natural Sciences Grade 9, SA 22

23 Conventional Mining Vanscoy, Sk Room & Pillar Agrium 23

24 Solution Mining Steam or Hot water injected Salt saturate inc. Potash recovery Single well (concentric casing) m deep (Barradeel, NL : 2800m) One well - 100,000 tonnes 24

25 Solution Mining Major cost Evaporation Ponds plastic liner Drying Kilns - Canada Production Sol : 4.5Mt, Belle Plaine, SK (Mosaic) Con : 3.0Mt, Colonsay, SK (Mosaic) 25

26 Solution Mining 26

27 Solution Mining 100m 27

28 Zechstein Style 28

29 Belle Plaine - Mosaic 3km Cooling Ponds Salt Tailings Cluster House Plant Crystalliser, Compactor 29

30 Belle Plain Potash 30

31 Potash Milling 31

32 Known New Projects 2015 : Prod 60Mt; Capacity 70Mt Committed new projects +10Mt Eurochem (Russia) Mt Rocanville (NA) 3.0Mt (2015) Legacy (NA) 2.0Mt (2017); 2.9Mt (2023) Esterhazy K3 (NA) 1.0Mt (2017); +$1.7B 32

33 Known New Projects Potential new projects ~20Mt BHP : Jansen (NA) 8-10Mt Sirius : York (E) Mt PH Am Potash : Holbrook (NA) 2.5Mt ROC (A) Elemental Mt; MagInd 1.2Mt Vale : Carnalita (SA) Mt HFR : Muga (E) 1.1Mt ICL/Allana : Ethiopia (A) 1.0Mt SBM : Eritrea (A) 0.4Mt; SO 4 33

34 Key Project Metrics Market Mineralisation inc. Grade Capex Opex Realised price 34

35 Key Project Metrics Success in potash is about Capex & Margin (not grade & scale) Market Potash is an industrial mineral Where are the buyers? Contracts not spot Transport can be a killer SK : US$50-60/ton AU : US$80/ton 35

36 Key Project Metrics Mineralisation Grade, Product, Depth, Insolubles Mining method Resource recovery K 2 SO 4 > KCl Crystallisation Drying Kilns - Canada Evaporation Ponds Intrepid : solar >$110 less than conventional US$ Dom 36

37 Key Metrics - Minerals Mineral Formula % K 2 O Chlorides Sylvite KCl 63 Carnallite MgCl 2.KCl.6H 2 O 17 Kainite MgSO 4.KCl.3H 2 O 19 Sylvinite KCl.NaCl ~20 Sulphates Polyhalite 2CaSO 4.K 2 SO 4.MgSO 4.2H 2 O 16 Langbeinite MgSO 4.K 2 SO 4 23 Anhydrite CaSO

38 Key Project Metrics Capex Why spend US$4B? Mine life yrs Old mines dying K+S PCS, K+S 38

39 Summary Potash is necessary to increased crop production no practical substitute Potash is an industrial not a metal Market is the important key metric Supply/demand balance excess supply The old way is dying volume will overtake price control 39

40 Interested in Potash? Potash Investing News Potash News Potash Industrial Minerals Potash Works 40