Potash Corp. of Saskatchewan Inc. on July 20 announced plans for a new two million mt potash mine and expanded milling operations in New Brunswick that will raise the company’s projected total annual potash capacity to 14.9 million mt by 2011. The four-year construction project will begin once necessary regulatory approvals are obtained and has an estimated cost of US $1.6 billion, which includes US $100 million for additional upgraded granular production capability.
“This major expansion prepares us for the next step in the growth of our company,” said PotashCorp President and CEO Bill Doyle. “By continuing to invest in our Potash First strategy, we will be well positioned to meet the expected growth in potash demand around the world.”
PotashCorp said the expansion at New Brunswick is strategically and logistically important, as it is located close to the company’s existing terminal at the Port of Saint John, offering short shipping times to key Latin American markets such as Brazil. Substantially increasing production in Eastern Canada also further diversifies the sources of PotashCorp’s growing potash capacity, the company said.
Using conventional underground methods, the new mine will draw on PotashCorp’s Picadilly deposit, which contains potash ore grades similar to those found in Saskatchewan deposits. Water inflow is not expected to be an issue in the new mine, the company said. Once fully developed, the new mine will replace the existing underground operation, while the current milling facility will be expanded by 1.2 million mt, including 750,000 mt of additional compaction capacity. Water inflow at the existing New Brunswick mine costs the company some $30-$40/mt per ton and it still makes money, said Doyle.
Doyle termed the deposit as spectacular, saying the relatively flat new deposit contains two potash seams, each varying in thickness to a maximum of 60 feet, that will provide a long-term, low-cost source of potash. By comparison, he said Saskatchewan seams are 17 feet.
Because this new mine will be built adjacent to the company’s existing New Brunswick property and use some of its facilities, PotashCorp said construction can be completed in less time than the five to seven years typically projected for a greenfield potash operation, at a per-mt cost 33 percent below the current estimate of $2.22 billion needed for 2 million mt of new production in Saskatchewan. The project will be financed out of free cash flow and existing credit facilities.
Plans are to keep the existing mine and mill fully operational throughout the construction and new mine development process. Once completed, the new mine will create 140 new full-time positions.
The New Brunswick development is in addition to previously announced debottlenecking and expansion initiatives underway at PotashCorp’s Lanigan, Patience Lake, and Cory operations in Saskatchewan, which are expected to increase the company’s productive annual capacity from 10.7 million mt to 13.7 million mt by the end of 2010. Doyle told analysts that further expansions in Saskatchewan could take total capacity to 15.7 million mt by 2015.
“Our goal is to be the lowest-cost supplier on a delivered basis to all key world markets,” Doyle said. “By expanding our existing operations in New Brunswick, we are capitalizing on the logistical advantages there, further strengthening our leadership position in potash for the benefit of our customers, investors and other stakeholders over the long term.”