Cleveland Potash Ltd., a subsidiary of ICL UK Ltd., has announced plans to cease potash production at the Boulby mine in northeast England at the end of June 2018 as the transition to the mining of polyhalite – marketed as polysulfate – is completed. The mine will continue to produce salt.
Around 230 workers are expected to lose their jobs as potash production is idled, reducing the total headcount at the site to around 500, and down from more than 1,000 just a few years ago.
Andrew Fulton, Cleveland Potash’s acting managing director, announcing the polyhalite transition timescale on Jan. 4, said the move to polyhalite was “vital” to secure the mine’s future, and that despite the anticipated job losses, it would remain East Cleveland’s biggest employer. He said the business has incurred “significant” losses in the last year, “underlining the need for the company to make the move to polysulfate as soon as possible.”
ICL first announced in late 2015 that it would gradually cease potash mining at Boulby by 2018 and transition to lower-cost production of polysulfate due to declining potash reserves and continuing losses at the site (GM Nov. 16, 2015). The company cited a re-examination of the potash reserves at the mine as behind the timing of that decision; it said potash reserves had fallen to 7.5 million mt as of September 2015, down from 16.9 million mt as of December 2014. ICL at that time also started the process of reducing employee numbers at the Boulby site.
“When we first announced our restructuring plans two years ago, we made it clear that potash reserves were close to the end and, at the point when they were exhausted, we would make the transition to polyhalite production, with the inevitable impact on our workforce levels,” Fulton said in this week’s statement.
“In view of both operational and market conditions, we propose ceasing potash production by the end of June 2018. This would involve concentrating on the final stages of potash production in order to benefit from the buoyant period for sales in the U.K. market, at the same time as completing the measures needed to ensure that we can meet the required production rates when we make the move to polysulfate,” he said.
Fulton indicated the initial production target for polysulfate would be 1 million mt/y, although he did not specify when this is targeted to be achieved. Last September, ICL talked of achieving 1 million mt/y by 2020 (GM Sept. 15, 2017). Boulby produced 248,000 mt of polysulfate in 2016 and output reached 327,000 mt in the first eight and half months of 2017, with some 450,000 mt expected for the full year. Polysulfate is a multi-nutrient fertilizer containing sulfur, in addition to potassium, magnesium, and calcium. Polyhalite reserves at Boulby are put at around an estimated 1 billion mt.
ICL said it plans a range of projects to achieve the required polysulfate production rates, including modifications to mining operations and underground infrastructure, as well as to surface crushing and screening capacity, and earlier talked of a goal to add granulation facilities. In parallel, the company said it will continue to expand the polysulfate market, by, among other things, developing a range of innovative polysulfate products, including a compacted potash and polysulfate product marketed as PotashpluS®.
The Boulby mine currently is the world’s only producer of polyhalite, but junior firm Sirius Minerals plc has a polyhalite mine under development only about 12 miles from ICL’s Boulby mine. First production at Sirius’ Woodsmith mine is targeted for 2021. Reports of talks between the two companies over a potential buyout of ICL’s Boulby operation were circulating in the Israeli financial press this past autumn (GM Sept. 15, 2017). ICL, which has been selling off assets in the past few years as part of its strategy to reduce debt, said at the time only that it was studying various options, including cooperation and the sale or purchase of companies, and that it would make an announcement if and when there was anything to report. An ICL UK spokesperson this week declined to comment on the matter, referring such inquiries to ICL headquarters.