South Boulder Mines Eritrea

By Tim Boreham, The Australian

We suggest that 99 per cent of the room wouldn’t raise their arms, and those who do are fibbers or fertiliser tragics. Given the Big Australian’s ballsy ploy, we’ll be hearing much more about the potassium-rich substance that is as crucial to growing food as phosphate.

For the uninitiated — that is, the 99 per cent — potash is the catch-all name for various potassium salts. Most fertilisers consist of three core elements — nitrogen, phosphate and potassium — with the consistency varying according to the type of crop.

Potash global consumption stands at 50 million tonnes a year and unlike most raw materials Australia doesn’t produce an ounce of it. Production is dominated by Russia’s Silvinit and Uralkali, rumoured merger partners that account for more than half of global production. Traditionally, Germany has been the leading producer.

South Boulder Mines (STB) chief Morry Hughes says there are barriers to developing potash deposits, including their depth: the last new mine started in Germany in the late 1980s. But on the plus side they’re usually uniform in quality and also extensive. Potash Corp, the biggest single producer, acts as oil’s equivalent of an OPEC swing producer, curtailing or increasing production according to demand trends.

The global potash price has been favourable, hovering at about $US340 a tonne. This compares with the average $US620 a tonne at the 2008 peak, but is well up on the $US175 a tonne level of 2006.

As with phosphate, potash pricing was meant to be immune from the global financial crisis, despite the perception that fertiliser is immune from the cycles because everyone has to eat.

In truth it is more complicated: corn and palm oil growers created a spike in demand when oil prices soared because their product was being used for biodiesel.

Locally, there are three or four resource juniors playing in potash, although not necessarily exclusively in that commodity.

South Boulder Mines has been better known for its Duketon nickel venture in Western Australia with Independence Gold, but it’s also appraising its “world class” Colluli potash project in Eritrea.

South Boulder had a tenement at Lake Disappointment, next to fellow potash hopeful Reward Minerals (RWD), but native title difficulties sent the company scouring the world.

It settled on the emerging mining province of Eritrea, where potash has been used for centuries.

“We have been involved in potash for some time, which not many people have given us credit for,” Hughes says.

But with BHP getting into potash in a humungous way there are more investors coming on board. He estimates between 20 per cent and 25 per cent of South Boulder’s share base has been attracted by potash.

In a 50-50 venture with Rum Jungle Uranium, Reward is working two exploration leases over a 150km expanse in central Australia, from Lake Amadeus to Karinga Creek.

“An analogous model would be the Great Salt Lake in Utah, the largest potassium sulphate producer in the US, [or] the Dead Sea.”

Speaking of Utah, Transit Holdings (TRH) has earned a 75 per cent interest in a tenement spanning 390sqkm, in the state’s sparsely populated southeast. The parties are aiming for an “exploration target” of 2.3 billion tonnes.

Completing our potash troika, Elemental Minerals (ELM) recently started drilling on its Sintoukola project in the Republic of Congo, part of a four-year effort to take it to bankable feasibility stage.