A Canadian company is expected to open a phosphate rock mine in Idaho in late 2014 or early 2015.
It will be the first underground phosphate rock mine in the United States and will add to the expanding global supply of phosphate rock and phosphate fertilizers.
Stonegate Agricom Ltd. is a junior mining company based in Toronto.
Most phosphate rock mines are open pit, but the phosphate deposit at Stonegate’s Paris Hills project in southeastern Idaho runs from the surface to a depth of 1,100 metres. It is doubly unusual because Stonegate is digging into a North American industry dominated by major players like Mosaic, Agrium and Potash Corp.
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Despite the challenges of underground mining and competition from vertically integrated players in the fertilizer business, chief executive officer Mark Ashcroft, said the project is financially viable because the phosphate rock at the Paris Hills site is high grade.
“This requires no beneficiation or processing from our side before the integrated producers can use (it) to actually manufacture MAP or DAP,” said Ashcroft, who went to high school in Thompson, Man., before launching a 20 year career in mine management and mine project finance.
“That’s the opportunity here. It’s such high grade that we don’t have to process it.”
In late March, Stonegate released a pre-feasibility study for its Idaho project, noting the mine will have a life of 14 years and produce 800,000 to one million tonnes of phosphate rock annually.
Stonegate estimates the average price for phosphate rock will be $160 per tonne over the life of the mine, which is 20 percent lower than the current price of $200 per tonne.
Ashcroft said the price estimate is conservative, but it’s possible phosphate rock and phosphate fertilizer prices could remain lower in the medium and long term because countries like Morocco and Saudi Arabia have developed or plan to expand their phosphate production.
“Currently, there are major projects carried out in Morocco, Peru, Saudi Arabia and Russia that will bring new mining and processing capacity for phosphate rock over the next five years,” said Michel Prud’homme, director production and international trade for the International Fertilizer Industry Association (IFA).
“So, indeed there will be an increment of potential rock production over the next five years… (of) 26 percent or 20 percent.”
In a 2011 report, Prud’homme and his IFA colleague Patrick Heffer said global phosphorus fertilizer supplies would grow from 42.1 million tonnes in 2011 to 47.8 million tonnes in 2015. Meanwhile, phosphorus fertilizer demand would expand from 40.7 million tonnes to 44.0 million tonnes in 2015.
“Over the next five years, close to 40 new (phosphate plants) are planned to come on stream in 11 countries,” they wrote.
As an example of increasing global supplies, Saudi Arabia opened the Maaden plant in 2011, the largest phosphate fertilizer facility in the world. At full capacity, it can produce three million tonnes of di-ammonium phosphate (DAP) annually, which represents about 10 percent of global DAP production.
David Asbridge, a fertilizer industry analyst who runs NPK Fertilizer Advisory Services in St. Louis, Missouri, has predicted that expanding global supplies will put downward pressure on phosphate fertilizer prices in the short and medium-term.
But Ashcroft said he isn’t worried that prices will collapse. He said it will take years and a great deal of foreign capital for Morocco to turn its massive phosphate rock deposits into fertilizer. As well, the Maaden plant may be huge but it hasn’t severely disrupted the supply-demand balance.
“When it (Maaden) was initially coming on, it was three million tonnes of (DAP) production (annually). The net impact is only about 1.5 million (tonnes) because there were other facilities around the world closing down.”
