Canadian Mining Journal

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Saskatchewan welcomes K+S Aktiengesellschaft as potash expansion continues

The German-based mining conglomerate K+S Aktiengesellschaft of Kassel is the world’s largest salt producer and a very large potash producer too.


The German-based mining conglomerate K+S Aktiengesellschaft of Kassel is the world’s largest salt producer and a very large potash producer too.

In fact, the company proudly traces its corporate roots back to discovering potash-bearing salts in 1856 and the establishment thereafter of the world’s first potash mine.

In the century plus since, K+S, or its predecessor companies, have been mining potash in Germany, but never beyond.

That is about to change. A subsidiary company–K+S Potash Canada–is currently developing the first new potash mine in Saskatchewan in 40 years and at a cost of $4.1 billion. K+S announced the project in November, 2011 and is on schedule to produce its first tonne from the operation, located some 60km north of Moose Jaw, in mid-2016.

“We looked at deposits around the world,” says Dr. Ulrich Lamp, president and chief executive officer of K+S Potash Canada. “Our choice was Saskatchewan. We acquired a really rich deposit, it’s a politically stable jurisdiction and our investments are secure.”

K+S’s Legacy Project, as it is known, is just one of several major potash projects underway in the province. In fact, it is no exaggeration to say that Saskatchewan’s potash industry is booming at the moment.

Australia’s BHP Billiton and Brazil’s Vale have major new mines in the works and the three big, established players–Potash Corp, The Mosaic Company and Agrium Inc.–are investing $14 billion in mine expansions.

As well, says Tim McMillan, the province’s minister of energy and resources, lands held under exploration permits or development leases have grown to four million hectares from a mere 400,000 ten years ago.

“We have worked very hard to create a mining-friendly economy and to make sure that people around the world know that their investments are safe in Saskatchewan,” says McMillan. “We understand the mining business and we want it in our province.”

Furthermore, Saskatchewan is rich in natural resources, especially potash. The potash belt is vast, stretching east to west from border to border and roughly from south of Regina to Saskatoon in the north. Even with all the new production slated to come on stream over the next decade, the province’s potash resource will last several hundred years, according to estimates prepared by the department of energy and resources.

One other factor is driving the boom. World demand for the product–a key component in fertilizer–is growing three to five per cent annually and is expected to continue at the same rate.

“People in developing countries like India and China want to have higher quality diets and that means those countries have to increase their agricultural output,” says McMillan.

Small wonder then that major multinational mining companies have been beating a path to Saskatchewan in recent years with plans to develop new potash mines.

BHP Billiton decided to build rather than buy its way into the business after the federal government quashed its $38.6-billion hostile bid to take over Saskatoon-based Potash Corp in 2010.

BHP subsequently acquired property about 140km southeast of Saskatoon and is in the midst of conducting a feasibility study on what is expected to be the world’s largest potash mine.

The underground workings–at a depth of 1050 feet–will eventually span an area stretching 38km by 26km. To date, the BHP board has approved a capital investment of $2.6 billion to excavate and line both production and service shafts and the mine will be capable of producing up to 10 million tonnes annually when fully developed, though that won’t happen until sometime into the next decade.

Brazil’s Vale, the world’s second largest mining company, acquired a property spanning 51,840 hectares near the hamlet of Kronau, 30km southeast of Regina, and began exploration drilling in 2009.

The deposit, which is 55m thick, is located at depths of 1,600 to 1,700 feet–

 

too deep for an underground mine. Therefore, the company envisions a solution mine in which water is injected into the deposit to dissolve the potash and the potash-rich solution is drawn back to the surface.

Vale is currently seeking a joint venture partner before proceeding with a feasibility study, says Matthew Wood, Regina-based manager of the company’s Kronau project. The company cleared a major regulatory hurdle last fall when it received final environmental approval from the province. The provincial permit includes permission to draw water from Buffalo Pound Lake, some 90km northwest of Kronau, and the mine will consume a lot of water–250 cubic metres an hour.

“We need a constant stream of water,” says Wood. “That’s one of the disadvantages of solution mining, but it has a lot of other advantages environmentally. It’s far less disruptive on the surface and farmers can continue farming on lands right above the mine.”

K+S is also developing a solution mine and will be drawing water from Buffalo Pound, although its Legacy Project is a mere three kilometres from the lake.

The company’s deposit is 1500m below the surface whereas the limit for underground potash mining is generally around 1000m. The mine will eventually employ about 300 permanent workers. Production will begin in the second half of 2016, will ramp up to two million tonnes per year in 2017, and by 2023 will reach full capacity of 2.86 million tonnes per year.

The company currently has some 1,800 workers at the site and about 1,500 of them are housed and fed in a huge construction camp, which one recent visitor describes as a “sea of ATCO trailers.” Those employees are drilling injection wells, building the surface infrastructure, including a processing plant and a tank farm for storing water, and they are creating vast caverns in the salt formation beneath the deposit–a critical first step.

Solution mining occurs from the bottom up rather than top down. Dr. Ulrich explains that water is injected to dissolve the salt and create caverns measuring 250m across by 60m deep.

The company will complete 18 caverns by year end, 36 by the time the mine goes into production in 2016 and the number could grow to 70 with future expansion.

Once the mine is operating, water is injected into the potash formation to dissolve the mineral. The solution falls into a cavern below, flows through a channel to an adjoining cavern and is drawn back to the surface through another well.

Processing occurs in three stages: evaporation to eliminate water and some of the salt, clarification to remove remaining salt and any other impurities, and crystallization in which the potash is dried completely and reduced to a marketable commodity.

Moose Jaw is the closest large urban centre and the impact of the K+S Legacy Project is already being felt, says the city’s Economic Development Officer Deb Thorne.

“It’s the biggest thing to hit our city in a long time,” Thorne says. “We’ve seen a lot of activity related to it. New people are moving to the city. There’s new rental units being built, new hotels, new restaurants. Last year, our building permits hit an all-time record.”   


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1 Comment » for Saskatchewan welcomes K+S Aktiengesellschaft as potash expansion continues
  1. Peter T. Clark says:

    It was in the mid-70’s at KILBORN Eng., then the EPCM Mining leader and especially in Potash Mine Engineering where I was a young Project Buyer when they asked me to do a DETAILED EVALUATION ON BEHALF OF THE CLIENT, SASKATCHEWAN POTASH CORPORATION OF ALL MINE SURFACE PLANT AND UNDERGROUND CAPITAL ASSETS OF MINE PROPERTIES SUCH AS ALWINSAL, SYLVITE & DUVAL POTASH MINES, AND IF MY MEMORY SERVES ME “PCA” AND ONE OTHER. I WAS GIVEN ALL THEIR ORIGINAL TECHNICAL SPECIFICATIONS, DRAWINGS & DATA, EQUIPMENT LISTS, ETC., FROM THE KILBORN FILES AND FROM EACH MINE OPERATION. BASICALLY, I HAD TO ACCURATELY, DUPLICATE THE ORIGINAL REQUESTS FOR QUOTATIONS (VIA RFP, RFQ & RFT’S) ALL WAS SENT TO THE ORIGINAL SUCCESSFUL BIDDERS AND OTHER COMPETITIVE SUPPLIERS OF SAME OR LIKE EQUIPMENT, TO EMULATE A COMPETITIVE SITUATION. THE TASK TO PERFORM A DETAILED EVALUATION OF ALL MINE SURFACE AND UNDERGROUND CAPITAL ASSETS INCLUDING SPARE PARTS, MATERIALS AND UNDERGROUND ASSETS SUCH AS MOBILE EQUIPMENT LIKE POTASH ROAD-HEADERS, SERVICE & MAINTENANCE AND SUPERVISORY VEHICLES. TECHNICAL EVALUATIONS WERE COMPLETED BY ENGINEERING WHILE I PERFORMED COMMERCIAL BID TABULATIONS AND ROLLED UP A FINAL REPORT WHICH KILBORN MANAGEMENT SUBMITTED TO THE PROVINCIAL GOVERNMENT, PRIOR TO NEGOTIATIONS WITH THE OWNERS TO SETTLE AN EQUITABLE PURCHASE OF THE ASSETS, AND I GUESS YOU COULD SAY “NATIONALIZATION-TAKE-OVER” BY THE PROVINCE. I LEARNED AND REMEMBER A LOT AND BASICALLY NOT A WHOLE LOT HAS CHANGED.
    PETER CLARK
    MINING PROCUREMENT SPECIALIST

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