PotashCorp. of Saskatchewan Inc. announced plans Nov. 14 for a 2-million mt mine and mill expansion at Rocanville, Sask., that will raise the company’s total annual potash capacity to 15.7 million mt by the end of 2012, which is three years earlier than previously announced. PotashCorp said that by leveraging off the existing facilities and infrastructure at Rocanville, which the company believes is one of the lowest-cost production facilities in the world, it expects to complete the project in less than five years at an estimated cost of U.S. $1.8 billion. PotashCorp said this would be significantly faster and over 25 percent less expensive than comparative greenfield capacity, and will help maintain Rocanville’s already low-cost position.
“For nearly 20 years we have optimized the value of our potash assets and consistently served the needs of our customers by following our long-held strategy of matching supply to market demand,” said PotashCorp President and CEO Bill Doyle. “With a global environment of growing demand and tight supply, potash consumers around the world need us to bring more product to the table, and this is our next step in meeting that need. The cost of a greenfield operation has continually escalated, and at a very rapid pace. Our best estimate for a 2-million mt greenfield mine in Saskatchewan today is U.S. $2.5 billion, and that is only within the plant gate with no infrastructure requirements.”
PotashCorp says Rocanville, in southeastern Saskatchewan, is an extremely valuable asset due to the quality of the potash deposit and its proximity to the U.S. market. The geology of the deposit allows for the most technically advanced potash mining methods in the world to be applied, lowering production costs. To support this project, PotashCorp will significantly expand an area of the deposit adjacent to the existing Rocanville potash Crown lease. One new service shaft – used to transport people and materials – will be sunk in this new area of the deposit, while the existing service shaft will be converted to a production shaft. When the project is completed, Rocanville will have two shafts with ore-hoisting capability, substantially raising the volume of potash that can be brought to the surface. A new underground conveyance system will be constructed to transport ore from the new mining area to the production shafts. This will reduce both the cost of the expansion and the ramp-up time, as only one new shaft will be needed and existing underground workings will partially support the increased production. Mining machines, underground services, and infrastructure for power will be added as required.
A new mill that will process 2 million mt of additional finished product annually will be built adjacent to the existing mill. New offices will be constructed on the site of the new service shaft, while existing load-out, storage, and onsite rail capability can be leveraged to handle the increased mt with minimal investment. The project will begin immediately after final permitting approvals are received.
Earlier in the year PotashCorp announced debottlenecking and expansion projects at Patience Lake (returning 360,000 mt of idled capacity by 2009), Cory (a 1.2-million mt debottleneck and expansion by 2010), and New Brunswick (a new 2.0-million mt mine with ramp-up starting at the end of 2011). PotashCorp said with the rest of the potash industry believed to be operating at or near capacity, it expects the additional capacity at Rocanville to be necessary to meet further demand growth. These projects, combined with expected other future debottlenecking opportunities at the company’s existing Saskatchewan facilities, will raise its projected annual capacity to 15.7 million mt by the end of 2012 and 17.2 million mt by 2015.
“We believe the factors driving long-term growth in potash demand are unlikely to reverse,” said Doyle. “As the company with the expertise and ability to bring on significant capacity more quickly and at lower cost, PotashCorp is well positioned to meet that demand. As we have in the past, we will manage this capacity according to market demand, always striving to meet the needs of our customers around the world while delivering value to the investors who have supported our continued growth.”