Editor’s note: What’s this about potash on an energy website? The same sort of drilling rigs that are used for oil and gas are used for helium, now lithium, and of course, potash. Many of the oilfield services used in oil development also work in the potash sector, especially in solution mining. And when the oil downturn hit, potash is what kept many oilfield service companies in business. Steve Halabura is CEO of Buffalo Potash. 

Putin’s invasion of the Ukraine has brought down sanctions against the Russian financial system, Russian oligarchs, and Russian resource exporters.  You can also lump Putin’s henchman Lukashenko into this mix. When you do this, you taint 40% of the world’s trade in potash.

Who’s left to carry the load?  Saskatchewan.

Given how important potash has become, maybe it’s time to go back and relearn a bit about this stuff called potash.  Time for POTASH 101 boys and girls!

What is potash?

Simply put, it’s a mineral made of potassium chloride (KCl) and whose geological name is sylvite.

Why is it a big deal?

It is a vital plant fertilizer, part of the “N-P-K” trio that farmers are familiar with. It’s an inorganic material that cannot be synthesized from something else (like urea fertilizer) so it must either be mined from rock beds or precipitated from brines that contain it.

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Where in the world is it found?

Potash deposits in Germany used to be the “Go To” until after the First World War, when deposits in New Mexico took the lead.  About this time potash was discovered in Russia and Belarus.  After the Second World War potash in Saskatchewan took hold, gradually increasing in production as deposits in Germany and New Mexico got mined out.  Today, the world leaders are Saskatchewan, Russia, and Belarus, with lesser supplies in China, Israel, Brazil, and the U.K.

Potash. Photo by Steve Halabura

 

What is “KCl”, “K2O”, and “MOP”?

If you spend any time around potash junkies, you will hear these terms.  “KCl” is the chemical abbreviation for potassium chloride while “K2O” stands for potassium oxide.  Potash itself is generic word describing a variety of potassic derivations – as a chloride, nitrate, sulfate – and in other mineral forms, like carnallite which consists of potassium and magnesium.  K2O is a common standard by which the fertilizer value of these different forms can be equated. For instance, you multiply tonnes of “KCl” by 0.6317 to get “K2O”.  “MOP” is “Muriate of Potash” or potassium chloride, and is often used to refer to potash product, which is about 60% K2O or 95% KCl.

How was potash formed?

Potash was precipitated from ancient oceans.  During the Middle Devonian period, or some 385 million years ago, Saskatchewan was a vast land-locked inland sea (think the Dead Sea) located at the equator. For millions of years, seawater from a larger global ocean seeped into the sea, where the water evaporated, leaving behind the salts.  These salts were buried and today they are called the Prairie Evaporite Formation.

How big is Saskatchewan’s potash resource?

Saskatchewan has a vast potash resource ranging from 76 to 125 billion tonnes of potash (KCl) which at current production rates, is at least 2,000 years of mining life.  Yup, that was a mighty big ocean!

How Is Saskatchewan’s potash mined?

Potash is mined three ways – either by sinking a shaft then removing the highest-grade potash bed using machines (called conventional or underground), or by drilling holes into it, then dissolving all the potash and salt beds using fresh water and pumping the resulting brine to surface where the potash is crystallized out.  A third way (called selective solution mining) uses salt water to dissolve out only the potash, leaving the salt down in the ground.

There are eight operating underground mines, one planned underground mine (BHP Jansen), three operating solution mines, and five planned “New Generation” solution mines.

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Interestingly, only 9 to maybe 18% of Saskatchewan’s vast resource is suitable for conventional underground mining’ yet these mines account for 84% of potash production in Saskatchewan. Why? Three reasons. One, the first miners to set up shop in Saskatchewan were from New Mexico, and this is how they did it down there.  Two, tunnels work only to a depth of maybe 1100 meters – any deeper, and rock pressure causes the tunnels to close back up. Three, the technology to mine potash by dissolving it wasn’t developed until the 1960s where it was used at the Belle Plaine mine.

The first two mining methods require lots of capital to build and use up valuable resources like fresh water. “New Generation” companies like Buffalo Potash and Gensource Potash hope to use selective solution mining and new technology to allow for cheaper, and more efficient potash production, while using less water and leaving less surface waste salt.

What are those big red piles beside the mines potash?

No, those are piles of salt (sodium chloride, or table salt) and red clay. In the ground the sylvite mineral is part of a larger mixture of salt and clay that forms a rock called “sylvinite” so when the beds are chewed up by mining machine, the whole mixture comes to surface and is run through a refinery, where the potassium chloride is separated from the salt and clay. It takes about 2.4 tonnes of sylvinite to make 1 tonne of MOP, so the remaining 1.4 tonnes of salt and clay left behind are stored at surface – these are the big red mountains you see at every operating potash mine.

Is the demand for potash growing?

Long-term world demand for potash has grown at an average annual rate of between 2.5% and 3.0% since 2000, driven by the expansion in the production of grains, oilseeds, fruits, and vegetables with increases in food demand driven by population growth, declining soil fertility, and climate change.  It is expected that worldwide demand will grow from 69 million in 2020 to 73 million tonnes by 2023.

Which countries are the biggest producers and exporters of potash?

Saskatchewan is the largest single potash producer at 31.8% of the total, with Russia and Belarus having a combined production of 37.6%.  In terms of exports, Canada (i.e., Saskatchewan) is the largest exporter at 39% of the total, with Russia and Belarus collectively exporting 40%, or 22 million tonnes “KCl”.

 What is potash worth to a producer?

From 2013 to 2020 potash prices were weak. For instance, in 2020 potash prices were 30% lower than the 10-year average dropping to $230USD per tonne Granular MOP US Corn Belt. However, this reversed in 2021, with prices reaching $710 USD per tonne Granular MOP US Corn Belt as of Feb 4, 2022. The week of the Russian invasion of the Ukraine, prices spiked to $810 USD. How high up will they go?

What will happen if there is a sudden loss of Russian and Belorussian potash?

If Russian and Belorussian potash is embargoed, only Saskatchewan has the resource to replace it, but this means doubling Saskatchewan’s current production level. Some of this may be replaced by expanding existing mines however more mines will be needed.  BHP Jansen’s mine will add 3 million tonnes but it won’t be in production for at least five years.  The “New Generation” may be able to exploit this “Production Gap” by coming onstream quicker but this will depend upon the availability of investment dollars.

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Quo Vadis Saskatchewan?

Here are four take-aways:

  • There is a lot of room in the commercial potash belt for new mines. The Ministry of Energy and Resources Lands Mineral Tenure branch estimates that the potash area in Saskatchewan covers approximately 7.7 million hectares with 100% Crown ownership being some 5.6 million hectares, mixed ownership being some 357,000 hectares, and 100% freehold ownership being some 1.8 million hectares. If the average mine is 50,000 hectares, there is room for 150 additional mines.
  • Saskatchewan has a well-established supply chain for goods and Saskatchewan has many of the world’s best suppliers supporting the potash industry daily. The Province has an eager and well-trained work force ready to do what it takes to get new production out of the ground.
  • New Generation potash miners like Buffalo and Gensource offer ways to expand and ramp-up production quickly by using the tool kit of the oilpatch service and supply sector. It takes a lot more time and money to sink a shaft than it does to drill a series of holes, so if the sector keeps expanding, solution mining will be the “Go To” place.
  • The Saskatchewan government has consistently demonstrated a rich, active, and rewarding advocacy of its peoples’ potash resources by means of providing technical support, industry publications, conference participation, and one‐to‐one presentations and communication. I am sure that if mineral tenure regulations need tweaking to ramp up production, the government will be there to do its part.

 

Steve Halabura is a professional geologist whose work over the years includes potash, oil, natural gas and helium. He can be found on LinkedIn at https://www.linkedin.com/in/steve-halabura-a715461b/ and reached at steveh@conceptforge.ca.

 

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