Giant fertilizer maker Yara has agreed to make a strategic investment of approximately CAD 40 million in IC Potash Corp (ICP) and has entered into an off-take arrangement for 30% of all products produced by ICP’s Ochoa project in New Mexico for a period of 15 years. ICP and Yara have also agreed to discuss the possibility of establishing a jointly held entity for the purpose of marketing products produced by the Ochoa project. The New Mexico mine contains proven and probable reserves of more than 400 million tonnes of ore. Potash is used by farmers to strengthen plant roots and defend against drought.
ICP’s objective is to start commercial production in the fourth quarter 2015, with an estimated annual production of some 0.7 million tonnes of SOP and SOPM (Potash Magnesium Sulphate). SOP is a non-chloride based potash fertilizer used in the cash crop and horticultural industries, and for agriculture in saline and dry soils. It is considered a premium product, carrying a substantial premium over the price of MOP.
In another development, Ethiopotash is developing a potash resource in Dallol in the Danakil Depression of Ethiopia, based on the mining and exploration permits held by the company. Yara entered in 2009 into an agreement with two partners to participate with 16.67% ownership in Ethiopotash. The partners were XLR with 57.33% ownership and management of the company, and Seftec with 26% ownership. Yara has now agreed to increase its ownership to 51% and take over management of the company, while XLR will retain a 49% ownership.
Estimated capacity for the Dallol project is 1-1.5 million tonnes potash per year, with resources of more than thirty years mining. Drilling activity started at site in 2010, and most drilling and drilling related activities have now been completed. The project development phase will be finalized with a Definitive Bankable Feasibility study which is expected to be completed in mid 2013. This study will be the basis for a decision on whether to proceed with project execution and realization, with production start-up 2-3 years thereafter.