BERLIN (ICIS)–Greg Cochran, CEO of Reward Minerals, accepts his company is “playing catch-up” in the race to be first to market with sulphate of potash (SOP) fertilizer drawn from Australia’s dry, brine-rich lakebeds, but he is nonetheless confident it can compete, thanks to “natural competitive advantages”.
Reward is one of five companies active in the region, alongside Australian Potash, Salt Lake Potash, Agrimin, and Kalium Lakes – which is arguably in pole position, having agreed an in-principle agreement to supply SOP to German fertilizer major K+S.
Of the two major potash grades, which can vary in potency and colour, one is produced and consumed in vast amounts: muriate of potash (MOP), while the other, SOP, is far less common, yet offers far greater nutritional properties – and correspondingly, a greater price tag.
Reward has previously claimed to holds the rights to “the world’s largest SOP brine project outside China”, after the completion of a pre-feasibility study at its Lake Disappointment (LD) prospect in Western Australia’s Little Sandy Desert.
The lake – which was given its unfortunate name by prospectors in the 1800s, snubbed in their quest to find a ready source of water in the Outback – has a total area of 1,241km² (771m²), 749km² of which is currently accessible to Reward.
The project relies on digging a trench network in the lake surface, into which brine will slowly seep. Once left to evaporate in the desert sun, the resulting salts are harvested and processed into SOP.
Over a 27-year life, Reward says it can eventually produce up to 9m tonnes of the high-quality plant nutrient, with a run rate of over 400,000 tonnes/year.
Cochran adds that the 27-year estimate is based on just 6% of the available resource; so there’s a lot of lakebed still to dig.
He foresees a development period of around three and one-quarter years as achievable, followed by one year ramp-up to full capacity.
However, despite his optimism, the CEO acknowledges that of the five firms racing to market in the Outback, Reward is towards the rear of the pack.
Disputes and delays
“We wanted Reward to set a benchmark with its pre-feasibility study,” Cochran said. “We needed to remove the confusion surrounding the project.”
Reward was first listed on the Australian Stock Exchange in 1991, arguably becoming the earliest developer to see more than sand amid the dry lakebeds of Western Australia.
However, disputes with the indigenous Martu People delayed development for some time, and required a lengthy trawl through the court system before work could resume, with the signing of a Mining and Indigenous Land Use Agreement in December 2011.
“Investors lost patience, and we’re playing catch-up,” admits Cochran. “We’ve done the hard yards now, though. We’ve done the work.”
Indeed, winning back the trust of investors – while still competing with its rivals – will be Cochran’s greatest challenge.
“In terms of logistics and location, none [of the five SOP developers] has a massive advantage. We’re all restrained by the tyranny of distance – restricted by the number of flights, the cost of diesel, and so on,” Cochran says.
The strength of LD, he adds, instead lies on two key factors – the project’s grade of SOP, and LD’s geographic location within Western Australia.
“Grade is king”
“In mining, grade is king – whether that’s gold or potash,” Cochran said, referring to Reward’s claim of having the highest in-situ grade of SOP of all five developers.
LD’s has shown a grade of up to 13.4 kg/m³ of SOP, although Reward instead uses a more conservative average estimate of 10 kg/m³ for now, in an effort to keep its options open on the choice to dig more trenches, or dig them deeper.
A grade of 13 kg/m³ means 13 grams of SOP would be extracted from each litre of brine pumped from the trench into which the fluid rises.
“Agrimin can only offer 8 kg/m³, for example,” Cochran says.
As a result, he adds, competitors will need to pump more brine to produce the same quantity of finished product.
The second factor in Reward’s favour, the company says, is its location in the north of Western Australia’s vast emptiness.
The further south a mine is located, the lower the rate of evaporation, as a year-round average.
This is a key consideration, Cochran says, as brine given more time to sit before evaporating becomes denser, and therefore takes longer to evaporate – requiring more trenches to be dug to maintain production.
LD’s location also enjoys less rainfall than the more southern projects, such as Australian Potash and Salt Lake Potash. While rainfall is useful for refilling tanks, it also disrupts operations to some extent.
Only Agrimin’s Lake Mackay SOP project would enjoy similar benefits of low rainfall, and good year-round evaporation.
So what next for Reward?
Cochran is under no illusions about the challenges ahead: “Getting an offtake agreement is crucial. We’re starting negotiations, and we’re also looking for a technical partner to support the project.”
By the end of 2019, he says, “we’ll be ready to go”.
“A tagline we like to use is: ‘Lake Disappointment: anything but disappointing’.”
Whether investors and potential offtake partners agree depends on solving logistical challenges, overcoming legislative red tape, and winning back support for the LD project – before Reward’s rivals cross the finish line first.