The results are in and a major European fertilizer company’s study of its potash holdings in southern Saskatchewan says "Drill here."
Germany’s K+S Group has formally budgeted $3.25 billion for what it’s dubbed the Legacy Project, billed as "one of the world’s economically most attractive potash greenfield projects," to be built near Bethune, Sask., about 55 km northeast of Moose Jaw.
The company’s decision marks "a significant step towards the expansion of our potash capacities and enables us to participate in the growth of the global potash market," K+S board chairman Norbert Steiner said in a release Tuesday.
Initial plans call for a potash solution mine to be drilled at the Legacy site, with its first volumes to be extracted in 2015 toward an expected production capacity of two million tonnes per year by 2017 and 2.86 million by 2023.
Further expansion of the project over the following 10 years, to a production capacity of four million tonnes per year, is "possible in the long term," the company said.
The initial exploration area at the Legacy Project, which "only makes up a fraction" of K+S’s total permitted area in the province, has proven reserves of 160 million tonnes of final potash product, the company said.
"Considering the target annual production, this results in a useful life of more than 55 years, including the ramp-up curve," K+S said.
The site’s K2O content, an estimated 18 per cent, is "significantly higher than that of (K+S’s) German sites and will therefore enable more efficient and more economic extraction," the company said. "The remainder of this one potash lease area contains additional resources of almost a billion tonnes of potassium chloride."
The development "makes possible a unique diversification of production among potash producers," K+S said, adding it expects to use the new site as a "starting point primarily for sales to the emerging growth markets of Asia and South America as well as in North America."
The K+S project, when complete, would be the first greenfield potash project in over 40 years in Saskatchewan, the company said.
K+S bought its way into Saskatchewan potash exploration in March, when it completed a friendly $434 million takeover bid for exploration firm Potash One.
Potash One’s assets included over 515,000 acres in subsurface exploration licenses in the province, such as those for the Legacy Project. K+S has been "revising and optimizing" Potash One’s existing feasibility study in recent months, toward a mining concept "optimally consistent with (K+S’s) production and market forecasts."
Other companies’ recent moves into the Saskatchewan potash belt have been expected to put pressure on what’s been described as an "oligopoly" of a few companies handling most of the province’s potash resource.
Said new entrants have included global mining giants BHP Billiton and Rio Tinto.