World Potash ExplorationPotash Exploration Hot Spots
By Leia Michele Toovey- Exclusive to Potash Investing News
Potash has risen from relative obscurity, to one of the most talkedabout commodities in the global market, thanks to its application as afertilizer. As the world’s population increases, and the amount ofarable land shrinks, the necessity to get the most food production from afinite land base has resulted in a skyrocketing interest, and demandfor potash.
The potash market it is an interesting one, because it is what manypeople refer to as a “duopoly” due to the fact that the majority ofsupply is controlled by two major players- the North American producers,who jointly market their potash through Canpotex, and the producers inRussia, including the newly merged Uralkali-Silvinit, and Belaruskali.The control of the market share by a few players has resulted in whatmany people claim is unfair pricing, however, whether or not“price-fixing” is an issue in the potash market, the fundamentals behindthe rapid ascent in prices over the past few years are solid, andprovide plenty of incentive for a heightened interest in locating newreserves. This is exactly what is being witnessed, and here is a quicksnap-shot of areas around the world where potash exploration is heatingup.
The United States
The Holbrook Basin, located in Arizona, is reported to containbetween 0.7 and 2.5 billion tonnes of potash within a 600 square milearea, according to the Arizona Geological Survey. There are currently three exploration companies at work in the area, HNZ Potash, American West Potash, and Passport Potash (CVE:PPI). Passport Potashholds a 140 square mile land position in the Holbrook Basin, making itthe largest land holder. When asked why there was so much interest inthe Holbrook Basin, CEO of Passport Potash, Joshua Bleak commented “TheHolbrook Basin is the shallowest deposit in North America, and it iswell supported by infrastructure.” Outside of North America, in terms ofpotash, transportation costs can be an issue in terms of getting potashto market. The Holbrook Basin, according to Bleak, is well supported byrail and an interstate highway, and the Port of Long Beach, one of theworld’s busiest seaports, is located 550 miles to the west of theproject. The port is a leading gateway for trade between the UnitedStates and Asia.
In terms of potash deposits, the Holbrook Basin is a shallow deposit,which means that conventional mining is a plausible way to extract thepotash reserve, however, Passport Potash is evaluating both conventionaland solution mining methods to see what would be the best for theproject. Drilling and assaying is currently underway on PassportPotash’s Holbrook Basin property. These drilling results will becombined with Passport’s 2D seismic survey and historic drilling datafrom Arkla and Duval companies in the company’s upcoming NI 43-101Resource Report.
Brazil
Exploration interest in Brazil has gained a great deal of interestover the past five years, partly due to the growing domestic need for astable potash supply. Brazil is one of the world’s largest potash users,and is heavily reliant on imports of potash to support the growth ofmany crops, such as soybeans, sugar, and coffee, on its relativelyinfertile soil. In 2007, Brazil had the world’s ninth-largest potashreserves, according to Melo de Oliveira and the Mining Department,however, after just two years of exploration work the mining departmentincreased its reserves and upped its rank to the world’s third-largestpotash reserves, following the new discoveries. Explorers and miners inBrazil include Verde Potash (CVE:NPK).Verde Potash is hoping that its Brazilian Cerrado Verde potash minewill provide enough resources to supply all of the country’s futuredemand for potash. According to a company spokesperson, Verde Potashholds a 10.5-million tonnes of resources at 10.3 percent, which adds upto a potential billion tonnes of potash. The company aims to announce anupdated resource estimate for the property by the end of June or earlyJuly.
Saskatchewan
Saskatchewan may be home to the world’s largest, currently-operatingpotash mines, however, this does not mean that exploration for newresources has stagnated. Both miners and explorers are currentlyscouring the province, hoping to find more potash deposits tocapitalize on some of the highest-quality, lowest production costreserves in the world. Miners and explorers currently operating inSaskatchewan include: BHP Billiton (NYSE:BHP), Encanto Potash (CVE:EPO), Western Potash Corp. (TSE:WPX), Potash Corporation of Saskatchewan (NYSE:POT), Karnalyte Resources (TSE:KRN), and Agrium (NYSE:AGU).
Ethiopia
Ethiopia is home to the Danakil Depression, an evaporite basin wellknown for its potash reserves, with mining operations for potash carriedout intermittently since the early 1900s. Current explorers in Ethiopiainclude Ethiopian Potash Corp (CVE:FED), and Allana Potash Corp. (CVE:AAA).Ethiopian Potash has 481 square kilometers of potash developmentconcessions in the fairway of the Danakil Depression. The company has anexisting 128 million tonne resource grading 21 percent potash. AllanaPotash Inc. has acquired the option to earn a 100 percent interest inthree potash concessions totaling approximately 150 square kilometers inthe northeastern section of the Danakil Depression. Allana’sconcessions cover part of the previously defined Musley potash depositlocated on the edge of a 1,000 square kilometer evaporite basin thatlies along northern Ethiopia’s portion of the East African Rift.Previous drilling by the Ralph M. Parsons Company from 1958-1967resulted in the discovery and partial delineation of the Musley Depositwhich was reported to contain a resource of 171.27 million tonnesgrading 32.48 percent potassium chloride.