Race to Develop Australia's First Potash Project is On

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Researched by Industrial Info Resources (Perth, Australia)--With Australia's long history as a major agricultural producer and exporter, it is surprising that the country's history as a producer of potash, the main use for which is as a fertilizer, is very limited. With the world's population growing rapidly, recently passing the 7 billion mark and expected to hit 8 billion by 2027, and the ever-decreasing availability of arable farmland, the long-term global demand for potash is set to rise. This has prompted Western Australian exploration company Potash West NL (ASX:PWN) (Perth, Australia) to join the race to develop Australia's first potash mine.

The current region of focus for Potash West is the Dandaragan Trough, which begins less than 100 kilometers north of the Western Australian capital, Perth, and covers a total area of more than 3,000 square kilometers. The area contains one of the world's largest known deposits of glauconite, which is recognised as a potential potash feed stock, and the Dandaragan resource is located close to the surface, which may enable eventual mining costs to be minimized. The region has been explored by various parties, including the Western Australian government, over the past 50-plus years, but due to the low potash prices at the time, no extensive project development has ever been undertaken.

Potash West has only begun moving from a pure exploration stage into an early development stage, and it is expecting to commence an early scoping study in the third quarter of this year. The scoping study will focus on the economic potential of a 5 million- to 10 million-tonne-per-year open pit operation, which will supply ore to a 6 million-tonne-per-year beneficiation plant, which will produce up to 400,000 tonnes per year of potash. With Australia currently consuming approximately 500,000 tonnes of potash per year, all of which is currently imported from overseas, the entire production from the mine could potentially be consumed locally, reducing Australia's current reliance on overseas producers.

All going well, Potash West expects to bring the project into production by 2017, but it is not the only company in Australia hoping to become the country's first major potash producer. ActivEX Limited (ASX:AIV) (Brisbane, Australia) has been investigating its Lake Chandler potash project for a number of years, but has so far been unable to produce a project with strong economic viability. Reward Minerals Limited (ASX:RWD) (Perth, Australia) also is slowly progressing two projects of its own at Lake Disappointment and Lake Mackay, which could potentially begin producing over the coming years. Reward Minerals also is involved in a joint venture with Rum Jungle Resources Limited (Darwin, Australia) (ASX:RUM), which is continuing to progress its Karinga Creek project in the Northern Territory.

Which company will eventually be able to claim that they are the first major potash producer in Australia remains to be seen, with all of the current projects still requiring at least a couple of years of development before moving into production. Regardless, the eventual reduction in Australia's current reliance on overseas potash imports, as well as the obvious cost advantages to local potash consumers, can only be seen as a positive.

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