Potash: Pink gold of region

When it comes to the colour of money, at least in East Central Saskatchewan, it's very much pink.

Well at least it's pink that turns into the green of cash thanks to a vibrant potash mining sector, a sector that is in the midst of some dramatic growth.

That is good news regionally, but also provincially, since potash is the leading mineral in terms of sales in the province where the overall value of the mining sector was near $10 billion as recently as 2008.

Potash mining has been part of the local economy for decades, with mines near Esterhazy, now owned by Mosaic, and one near Rocanville, operated by the PotashCorp, were begun in the late 1960s. Both locations remain highly productive for their respective companies.

In fact reserves for both the PotashCorp and Mosaic are such that both have undertaken major mine expansions.

Bill Johnson, Senior Director of Public Affairs with PotashCorp said work at the company's Rocanville property is part of a larger, company-wide expansion in potash production.

"We are in the midst of a $7.5 billion expansion program on our mines," he told PrairieLife.

Of that $5.5 billion is being invested in Saskatchewan mines, with the remaining $2 billion in New Brunswick.

"We started the expansion in Saskatchewan in 2003," said Johnson, adding "we should be through the bulk of the work by 2013."

Mosaic Potash at Esterhazy is also undertaking an expansion of its mine.

"We're in the process of an expansion," said Norm Beug, Senior advisor to the Potash business unit. The expansion will take the current mine from five million tonnes annual capacity to seven million tonnes. "That's going to occur between now and 2015."

The largest element of the work is a new mine shaft being termed K3, which will bring ore to the surface to be processed in Mosaic's existing infrastructure.

"We're doing the foundation work now," said Beug, adding the site will be frozen over the winter, with drilling of the approximate 3,500-foot shaft beginning in the new year.

When complete the two million tonne expansion will cost Mosaic "a couple of billion dollars," said Beug.

The work at the Mosaic mine will grow staff requirements. Currently the mine employs about 850 staff, and Beug said, "we'll be adding a few hundred jobs."

One company that is moving toward new potash mine development in Saskatchewan in BHP Billiton, with work progressing on a mine site near Jansen and extensive exploration efforts in the Yorkton-Melville area, a possible site of a second mine for the company in the future.

BHP Billiton is a newcomer to the potash field, but brings a wealth on mining experience as the world's third largest mining company, said Christopher Ryder, vice-president, external affairs with the company.

Ryder said the bulk mining technique is "something we're very good at," based on experience in other commodities, adding they are also familiar with moving such a product as "the second biggest bulk shipper in the world."

The move into potash is a good one for BHP Billiton because it is a sector which promises the company growth, something not easily achieved in a large firm well-established in its other commodity developments, offered Ryder.

Since BHP Billiton wants potash to grow its base, it is not looking at a single mine development.

"We're looking at Saskatchewan as a potash basin," said Ryder, adding as such it is likely over the longer term the company will initiate a number of mine developments as world potash demand warrants. It is a philosophy the company already employs regarding copper mining in Chile and iron ore in Western Australia.

Once Jansen is on well under way, Ryder said a second mine will be developed, adding that could be on what it calls their Melville property.

"We're very excited by the Melville Project," he said. " The resource in that part of the province is very good."

Ryder noted the initial 2D and 3D exploration work has been promising. "Now we're doing more 3D and some drilling."

In terms of development, Ryder said the Melville property will mirror what is going on in Jansen, if it proceeds, adding the work in east central Saskatchewan is about three-years behind the work in Jansen.

By doing one project on the heels of another makes sense as a way to keep expertise within the company. Ryder said a project team is usually hired, and once a mine is completed moves on, with another hired at some point when another mine is initiated. By doing developments back-to-back the expertise is retained, and there is a consistency in developments.

Continued in YTW March 28.