While The Mosaic Co. closed its small Hersey, Mich., potash mine Nov. 5 (GM Nov. 11, p. 1), a small junior company stands ready to take the surrounding reserves and build them into a significant mine to serve the Cornbelt. Just as major nitrogen producers and would-be nitrogen producers see the value of having a nitrogen plant in the heart of the Cornbelt, Michigan Potash Co. LLC (GM Sept. 2, p. 11) sees the same value for that commodity.
Unlike many junior companies, the reserves are already there – found, developed, and dubbed the “U.S. Potash Project” in the 1980s by Pittsburg Plate and Glass (PPG), a former potash producer. PPG’s Kalium subsidiary had the goal of developing them into a 1million st/y operation, according to MPC General Manager Theodore Pagano; however, initial production levels of 140,000 st/y were stalled due to hard times for the potash industry. Essentially, a “volumes over price” strategy kept more production offline, and Mosaic, which later wound up with the mine through a sequence of mergers, favored its large production Saskatchewan mines, which could serve both the domestic and world markets.
“Mosaic owns the Hersey facility, but they don’t own the U.S. Potash project … we do,” says Pagano, a potash geologist and engineer, who assembled former PPG/Kalium personnel to assist him with the development. “MPC worked quietly over the past three years to confirm the reserve could be commercially put into production as it was originally intended by PPG, and has secured nearly 400 20-year exclusive leases of mineral rights.”
Mosaic reiterated last week with analysts its decision to close the Hersey mine, saying it would have cost some $80 million to develop new caverns at the site and that expenditure was not justified when it could provide those 100,000 mt just as easily from Belle Plaine, Sask.
Pagano says MPC has engineered and designed a new potash facility, identified ore sweet spots, secured a surface location, and identified port and rail transloading options capable of handling 600,000 st/y of potash and 600,000 st/y of high grade salt. It anticipates construction to begin shortly at a location about 1.5 miles from Mosaic’s Hersey facility.
MPC says that due to its large Saskatchewan capacity, Mosaic does not want potash coming from Michigan. MPC says that within a 500 mile radius of Hersey, U.S. farmers consume some 4 million st/y of potash. MPC says that Michigan alone consumes 300,000 st/y of potash, with easy access to Indiana, Illinois, Ohio, Missouri, and Tennessee, and with a short boat ride to Wisconsin, Minnesota, and upstate New York. As for Michigan, MPC said PPG Kalium at one time had 80 percent of the Michigan market when it produced up to 140,000 st/y.
MPC says its reserves negate the need for imported potash, not just from Canada, but also from Russia and other offshore providers. It also says the location is well positioned to distribute potash into the Atlantic.
“We are not pulling off something new here,” said Pagano. “This was done once before by the world’s largest potash producer (PPG). We are doing it again with the same people, except now they have 30 more years of experience.
Pagano says the quality of the reserves is well-established and tested by independent laboratories. He maintains that there is enough potash sitting under Hersey to double U.S. output for over 150 years.
MPC has been approaching regional buyers and distributors about the project. And while the reserves are some 7,500 feet underground, Pagano says that technology has advanced to the point that that is no problem.
While MPC’s location may give it a leg up on competing junior potash companies, like the others, it still faces the hurdles of finding financing and backers, lower potash price