19th May 2016 07:44
LONDON (Alliance News) - Sirius Minerals PLC on Thursday said it has identified another possible revenue stream from its huge potash mine that will be built in York by producing de-icing salt, but said this would push up the cost of the multi-billion project.
The miner is primarily interested in the production of polyhalite from the mine being developed in the North York Moors National Park, but said a scoping study has shown the production of de-icing salt could add a new product line to the operation to enhance the overall economics.
Sirius said it would need to spend USD29.0 million, adding further capital to an already multi-billion project, to build additional infrastructure that would allow 2.0 million tonnes of de-icing salt to be produced per year.
Although some additional infrastructure is needed, the salt is located within the existing mining area and will utilise existing infrastructure being built for the main operation.
That production would come from the miner's inferred mineral resource of 55.0 million tonnes of de-icing salt.
Sirius said the production of de-icing salt, used for road maintenance and gritting operations, could have a "disruptive influence" on the existing market because of the low-cost nature of the company's project, and said it would sell the de-icing salt to markets in Europe and North America.
The possible move to produce salt has been made following the publication of that mineral resource estimate, and Sirius said the resource includes 210.0 million tonnes of higher grade halite, or salt, with a grade of over 95%.
Importantly, production of the salt would be derived from main production. The project plans to initially process 10.0 million tonnes of ore per year before rising to 13.0 million tonnes and then 20.0 million tonnes.
The salt would be obtained from the same ore from which the polyhalite will be extracted, meaning Sirius can extract salt at varying levels depending on the company's price and volume strategy at the time - essentially making it a by-product rather than an add-on operation that requires its own facilities.
The USD29.0 million capital cost will be added to the existing mine plan as a "bolt-on option", suggesting it is not a definitive plan.
"It would adopt an opportunistic approach, bringing on supply when market demand for salt was strong, although not at the expense of its polyhalite production. The company's project and its port is centrally located and able to readily access the two primary target markets of Western Europe and North America which, depending on the winter weather conditions, are between 10 to 15 million tonnes per year and 20 to 30 million tonnes per year in size respectively," said Sirius.
By Joshua Warner; [email protected]; @JoshAlliance
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