Minerals developer South Boulder Mines plans to open the world’s first open pit potash mine in Eritrea in 2016, MD Lorry Hughes said on Friday. He said that a definitive feasibility study had commenced on the Colluli potash project, which would cost between $500-million and $750-million to deliver.
“We are targeting an initial production rate of between one- and two-million tons of potash,” Hughes said.
“On current project progress, our operating costs should emerge among the lowest 10% of global potash producers,” he added. An updated Joint Ore Reserves Committee resource and scoping study for the 548-million-ton Colluli deposit is due shortly.
“Colluli is the world’s shallowest potash deposit, and is accessible as low as 16 m below the surface,” Hughes said.
“The imminent scoping study results will demonstrate to South Boulder Colluli’s financial and technical parameters; and if we can move that to eventual commissioning, will deliver a mine in a prime infrastructure location to sell into the largest growth markets for potash in the world – Asia.
“It is a sector which has demonstrated some very strong long-term fundamentals and there is huge interest in the sector as it boasts players such as BHP, Vale, Potash Corp and K&S delivering competitive tension.”
South Boulder Target open pit Potash Mine in 2016
South Boulder Mines expects to start production at the world’s first open pit potash mine by 2016 and possibly sooner, with start-up costs expected to be half the average for underground potash mines.
Managing director Lorry Hughes says the company’s Colluli potash project in Eritrea could be delivered for between $US500 million ($A466.8 million) and $US750 million ($A700.15 million).
“On current project progress, our operating costs should emerge among the lowest 10 per cent of global potash producers,” Mr Hughes told the Africa Down Under conference in Perth on Friday.
“Colluli is the world’s shallowest potash deposit, and is accessible as low as 16 metres below surface.”
Mr Hughes said there was huge interest in the potash sector, with players such as BHP Billiton, Brazil’s Vale and Canada’s Potash Corp delivering competitive tension.
Global consumption of potash, used in fertiliser for food production, is expected to surge 45 per cent in the 25 years to 2030, based on projections starting in 2005, Minbos Resources chief executive Robbie McCrae told the conference.
“This demand curve is underpinned by rising world populations, changing diets as incomes grow, constraints on arable land, government policies to enhance crop yields, and programs encouraging the use of biofuels,” Mr McCrae said.
“Since spiking in 2008, the average price for phosphate has been on a growth curve for the past two years and continues to trend upwards.”
Minbos Resources is exploring for potash in Angola and Democratic Republic of Congo.
South Boulder shares were down six cents to $2.41.