Page 4 - pd282-May20-mag-web_Neat

Potash growth attracts majors

and juniors alike

It is a fascinating time both do- tiliser division will provide them with, as the PR experts may say,
mestically and internationally in the “great visuals” for ESG investors and host governments.
fertiliser space and the positioning of The drawbacks for the majors could be a benefit for the in-
the major miners is perhaps the most creasingly fertile crop (did you see what I did there?) of emerging
fascinating. Australian potash juniors.
BHP Ltd has begun talking up These companies don’t need massive economies-of-scale to
development of its Jansen potash justify investment cases, they simply need enough offtake con-
project in Canada while Anglo American plc splashed out £405 tracts to secure funding for what are relatively low capex and
million for Sirius Minerals and its Woodsmith project in North opex operations.
Yorkshire in January. Their size is also such that they are unlikely to disturb the big
Anglo’s move for Sirius was somewhat ironic given it formerly international supply chains but they will be readily welcomed into
controlled Cleveland Potash plc, the owner of Woodsmith’s near- local and regional supply chains; whether their mines are located
neighbour, the Boulby potash mine, but discarded it in 2000 when in Western Australia, Africa or Europe.
management consultancy McKinsey advised the company ferti- It is rare for a mature mining jurisdiction such as WA to find
lisers were non-core to its portfolio. a completely new minerals sector but there is just that opportu-
Two decades on and not only has Anglo decided to re-enter nity with potash. As with all emerging sectors, not every hopeful
the fertiliser market, it will do so with a relatively unheralded prod- will make it to production, and even when they do some will still
uct; polyhalite. While Boulby produces product for the plus-60 stumble (as we have seen with the nascent lithium sector) but if a
mtpa muriate-of-potash (MoP) market, Woodsmith’s polyhalite junior potash sector is to succeed anywhere the world’s best min-
(or POLY4 as it has been marketed) currently comprises around ing jurisdiction, with all its associated skills, regulatory capacity
200,000 mtpa. and know-how, will be it.
To have success, Anglo will have to define a new market for a
product which has proven less effective than the other growing
potash market segment, sulphate-of-potash (SoP).
This is not taking into account the engineering challenge of COVID-19
building a deep (1,500m) mine in the North York Moors (a nation-
pipeline to a processing facility at the Teesside industrial zone adjustment continues
al park) with a plan of hauling product along a 37km underground
(which is incidentally right next door to the Riverside stadium,
home to the mighty Middlesbrough FC). As I said last month, Paydirt continues to adjust to the new
BHP has its own chequered history in the potash market. In realities of physical distancing brought on by the global
2010, the company was left with a $US300 million bill from its coronavirus pandemic.
failed takeover bid for Canadian miner Potash Corp of Saskatch-
ewan after the Canadian Government said it was not in the na- Our conference schedule has obviously been thrown
tional interest. Potash Corp later merged with Agrium to form Nu- into disarray by the lockdown restrictions but the entire
trien Inc, the world’s largest potash producer. company is working hard on new dates, new opportunities
This time around, BHP is talking up the potential of its Jansen and new ways of delivering the events which have grown
potash project, also in Saskatchewan. Nutrien chief executive into integral dates on the mining calendar. We will have
Chuck Magro has called it a “sure-fire way to destroy shareholder more information on our conferences in the next few
value”. months.
The global fertiliser market is dominated by Nutrien and a
handful of other integrated and/or state-owned fertiliser or chemi- Our editorial team also continues to adjust to coronavirus
cal companies, operating from just a few locations. restrictions. The launch of Paydirt Remote on our Paydirt
So, why are the mining majors attempting to break into the sec- TV YouTube channel has been a great success with plenty
tor? The demand fundamentals are most readily cited – growing of positive feedback. Paydirt TV, like the publications,
populations, emerging middle class, less arable land – but there is designed to bring the best of the Australian mining
are also other considerations. sector to our audiences. If you haven’t watched any of our
Chief among these is a “softer” play. Both Anglo and BHP have
set out to alter their public image in an effort to prove their sus- interviews yet, please visit youtube.com and search for
tainability credentials. Both companies are shifting away from en- Paydirt TV then like and subscribe.
ergy coal and are eager to identify themselves with “21st century,
sustainable, green commodities”. A strong, customer-facing fer-

dominic@paydirt.com.au @DominicPiper

Page 4 MaY 2020 aUSTRaLIa’S PaYDIRT