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Nov 282011
 

By Teri Walker–

In 2009, the interest in potash in northern Arizona resurged as potash mining companies began exploring the Holbrook Basin, an area east of Holbrook the U.S. Geological Survey says is underlain by 600 square miles of potash deposits.

The USGS has reported it believes the Holbrook Basin holds anywhere from .7 billion to 2.5 billion metric tons of potash, some of which underlies Petrified Forest National Park.

So, what is potash and why is everyone so interested in it?

According to the Potash Development Association, “potash is the common term for fertilizer forms of the element potassium (K). The name derives from the collection of wood ash in metal pots when the beneficial fertilizer properties of this mineral were first recognized many centuries ago.”

The USGS describes potash as an essential ingredient in fertilizers: “The term potash is loosely defined and refers to substances whose potassium content is expressed in terms of potassium oxide (K2O).”

Essentially, potash is used primarily in the production of fertilizers used worldwide. Its lesser known uses include aiding in the development of soap, glass and dyes, and a bleaching and disinfecting agent in textiles.

Potash has a long history of use, dating back to the earliest accounts of glass making, beginning about A.D. 500, when potash was used to make soap.

There are a number of potassium compounds collectively referred to as potash, including potassium chloride, potassium hydroxide, potassium nitrate, potassium carbonate, potassium chlorate, and potassium permanganate.

While nearly 95 percent of potash produced worldwide is used for fertilizer, some of the potassium compounds are also used for such things as fireworks, matches, water softening, and skin treatments. Potash even has some applications in the pharmaceutical industry and in food seasonings.

The earliest users of potash would leach the ashes of plants. It was after large deposits of potash were discovered beneath the earth’s crust that potash mining became popular, and now potash is almost exclusively accessed through mining.

Most of the world’s potash deposits formed as large, ancient salt water seas evaporated and potassium salts settled into beds. The beds were covered with earth over long periods of time, which explains why potash deposits are typically found at depths of hundreds to more than two thousand feet beneath the surface.

Some reports say the potash depositing process began about 550 million years ago, with the salts crystallizing, then depositing first layers of rock salt, and later potassium and magnesium salts. The process was repeated for millions of years.

The earliest known potash mining operations, where potash salts were extracted from the ground, occurred in the 14th century in Ethiopia, where mining is still being explored today.

The world’s largest recoverable deposits of potash are found in the northern hemisphere, with Canada leading with the largest deposits in the world. Russia is home to the next largest reserves, followed by Belarus. Germany holds the fourth largest potash deposits in the world. Aside from the United States, other countries mining potash include England, Spain, Brazil and Africa.

The worldwide demand for potash has increased in recent years with India and China vying to secure more of the potash fertilizer to support their countries’ ever-increasing food supply needs.

In the United States, the annual demand for potash fertilizer is hovering around nine million tons, according to Pat Avery, president and CEO of American West Potash. Of that, Avery says, potash mines in the United States produce about 1.5 million tons annually; the remainder of demand is met through imports from other countries.

The two companies publicly discussing their operations in the Holbrook Basin, American West Potash and Passport Potash, had both estimated during their initial exploration phases that their companies might extract one- to two-million tons of potash from their respective holdings. Since then, American West has confirmed through further exploration that it anticipates drawing at least two million, and possibly 2.5 million to three million tons per year. Passport Potash has not released its official anticipated annual mining volume, nor has the third operator currently exploring the Holbrook Basin, HNZ Potash.

With American West’s anticipated extraction alone, the U.S. annual production of potash would be doubled.

Industry analysts see potash values and demand increasing in coming years, and anticipate the commodity is positioned for big gains on the global market.

While markets overall have been rocked by economic uncertainties and chaos worldwide, analysts believe potash will continue to hold strong, and gain momentum.

In an interview with the International Business Times, Dundee Capital Markets Vice President and Senior Financial Analyst Richard Kelertas said, “Within the next year, we should see some growth return. That will be composed of three components: Farmers will use potash at normal levels and growth will be reflected in shipments and prices. Lands that will be brought back into production will expand demand. This is fallow or abandoned agricultural land throughout the world, especially in Africa, that has been bought up by either investment pools or sovereign wealth funds or specialty farm land managers. In the grand scheme of things that doesn’t seem to be a lot in terms of the total farmland area throughout the world; however, potash application rates will be much higher than normal because you are bringing it from infertility to fertility levels. So, we could see a substantial push and it will show up in perhaps a 0.5 – 0.75 percent increase in potash demand worldwide.”

Kelertas went on to say that he expected the average price of potash to be $505 per ton in 2012, with an increase to $520 average price in 2013, with the potential to peak at $620 or $650 per ton in 2013.

Asked what the most favorable regions for potash mining are currently, Kelertas said Saskatchewan, Canada; Utah; Arizona and Ethiopia.

According to American West’s Avery and Passport Potash President Joshua Bleak, the Holbrook Basin is favorably positioned for potash mining because of its accessibility, temperate climate, and the political stability in the region. Worldwide, there are known rich deposits of potash that haven’t been mined in some cases because they’re in remote locations that would be exorbitantly expensive to access. Others can’t be safely mined presently because of political unrest and violence making access dangerous.

“There are some tremendous potash deposits around the world that may never get mined because the region is too weak, unstable or volatile, and building the infrastructure necessary to power the mining operation and transport the mineral to market is simply out of the reach of some of these poorer countries,” said Ken Bond of Passport Potash. “It’s a little bit of a Cinderella story in Holbrook.”

Based on indications of the companies exploring the Holbrook Basin, potash and potash mining will grow to figure prominently in regional vernacular. American West Potash is nearing completion of its preliminary economic assessment, is preparing for the extensive mine permitting process and beginning preliminary steps of mine planning. While Passport Potash isn’t at the same stage, Bleak has said he is excited about the company’s initial findings and plans to continue exploration of the basin. HNZ Potash hasn’t revealed its plans for continuing to work in the basin.

Photos courtesy of U.S. Geological Survey

Potash may be extracted in rock form, then pulverized in surface plants, in preparation for converting to fertilizer.

 

 

The United States uses roughly nine million tons of potash annually, while only 1.5 million tons is produced in the country each year.