McMoRan Resources and Gold Star Resources Corp. may mine sulfur in order to take advantage of high prices, but those in the industry said those projects would be unable to begin producing for more than a year – or, perhaps, never.
McMoRan’s Co-Chairman James “Jim Bob” Moffett recently told investors the company was evaluating plans to reopen its sulfur mine in the Gulf of Mexico, about 40 miles from Venice, La. The mine, Main Pass Block 299, is about 210 feet below the surface of the water and is believed to hold the largest reserves in North America – as much as 60 million tons. The mine was closed in 2000, when the price of sulfur dropped to around $30/lt. Now that the price has risen twenty fold, reviving the project may make economic sense.
A McMoRan spokesman said it was “too early” to discuss the project and declined further comment. In a press release, the company noted the mine was approved for LPG storage in 2007.
While Main Pass still has the pipes in place that are needed to melt the sulfur, the remainder of the infrastructure was sold after the mine was closed. Industry sources said the biggest hurdle McMoRan will face is a lack of vessels to transport the raw material to shore for processing. The vessels used when the mine was operating were sold and converted to other uses. It would take several years to build or convert new vessels for the job. In addition, it would take months, or even a year or more, to heat the sulfur to the point it could be mined.
In the meantime, the current sulfur shortage was expected to come to an end in 2010 or 2011, when as much as 7 million additional tons will come online in the Middle East alone. When that occurs, many sources expect the price of sulfur will drop dramatically, most likely by 2012.
“They’re a day late and a dollar short,” one source said.”There’s still a glut coming online at some point – way too much.”
“The last time (the company started up the mine), they got their heads handed to them,” said another in the industry.
Gold Star’s Coronation Sulfur Project would be about 120 kilometers south of Edmonton, Alberta, on 60,000 hectares. In addition, the company has leased 81,373 acres in British Columbia for sulfur mining. Heating the sulfur for extraction in that part of Canada would take up to two years, which means the price would be heading down at the time the new mine began producing.
Company officials could not be reached for a comment, but sulfur sources in Canada were generally unaware of the project, and most were skeptical it would actually go forward.
Almost all sulfur has been obtained by cleaning the element from crude oil for the past decade, and startup cost and time were considered the biggest obstacles for frasch mining projects.