Mar 072012

By Linda Kor —

What does the future hold for Holbrook with the potential of new industry and what do we as residents need to prepare for? Those and other questions were addressed during the Feb. 29 Holbrook Business Development Group’s Community (HBDG) Forum that focused on the potential of potash mining in the Holbrook Basin.

Approximately 500 people were in attendance to not only learn of the reality of potash mining in the community, but to understand the impact it will have on area residents. Based on the presentation made by the CEOs of two of the operations currently exploring the basin, the impact will be tremendous.

Pat Avery, CEO of Prospect Global Resources, explained that his operation alone will provide between 300 and 400 permanent jobs for a mining operation with a life expectancy of at least 40 years. According to Avery, his project is a reality: “It’s about building partnerships and relationships. When you need to raise $1.4 billion for a project, people want to invest in certainties.”

According to Joshua Bleak, CEO of Passport Potash, partnerships and preparedness will be key to Holbrook’s growth. “People will be coming here from all over the world and the effect will be tremendous. The basic infrastructure here is good, but it has to grow. The cost of housing will jump; with just one grocery store you’ll see a shortage of the basics. For example, you won’t be able to find bottled water on the shelves and when you come in for your morning donuts, there won’t be any,” adding, “This will truly happen overnight if you are not prepared.”

Both operations are in a second drill phase, with Passport Potash officials expecting their resource report to be complete this month, which will give them an idea of how much potash lies under their acquired properties. Prospect Global is further in with the process, having received its resource and economic assessment reports, and is now proceeding through the permitting phase with the Arizona Department of Environmental Quality.

For Prospect Global, the permitting phase is expected to be complete before the end of the year. Once that is complete, the construction phase will take place, lasting from one to one and a half years and bringing 500 to 800 jobs to the area, though not all jobs will be available at once. Following construction, it’s estimated that there will be 300 to 400 permanent jobs, with the mine having a lifespan of at least 40 years.

Passport Potash has a very similar operation and anticipates similar figures.

Both operations anticipate producing two million finished tons of potash to go out to market each year. According to estimates from Prospect Global’s economic assessment, at $500 per ton this would mean annual revenues of approximately $1 billion for each of the companies if Passport Potash receives similar data.

A third operation, HNZ Potash, did not participate in the forum, but combined, the three operations could have an impact on this region, and more specifically Holbrook, of 1,500 to 2,000 new jobs in mining in addition to three to five times that number in jobs through ancillary industries. Those industries will include anything from heavy equipment repair, fuel and tires, to restaurants and retail.

When questioned regarding what the timeline will be when applying for jobs, both men indicated that now would be too soon, but that announcements will go out and training will be made available as the time approaches. The expectation is that the training will be provided through classes at Northland Pioneer College, the local high schools’ Northern Arizona Vocational Institute of Technology programs and through on-the-job training with certain contractors. “This will be great for Holbrook, but this will draw from all of eastern Arizona. We will be creating bus routes for employees and bring them in,” stated Avery.

With so much attention being drawn to the possibilities of growth, the question of whether there was anything that could stop the mining operations from going forward was asked.

“Absolutely. There are capital costs to deal with, the price of potash could drop, economic factors. But to me the worst case scenario is delay,” stated Bleak, referring to the very competitive market developing with the increase in potash demand and price. The Holbrook Basin operations are still in the exploration stages, but in existing mines in Canada, Russia and the U.S., expansions are taking place. This makes only a small window of opportunity to be in the forefront of providing for the demand. The operations in the basin are some of the top contenders, as long as they continue at their current pace.

Arizona State Geological Survey geologist Lee Allison also participated in the event and explained how some of those factors could work. “In an assessment on a global scale, there are dozens of projects looking at starting up in 2015, if everything works. Some of those projects still have to deal with infrastructure and political obstacles. The first ones in can grab market sharing; those who come later may have a difficult time. The numbers here puts Arizona in the forefront,” he explained.

One area resident expressed his concern regarding drilling through the Coconino Aquifer, stating that the operation would not only drain the aquifer leaving nothing for residents, but would also be “poisoning” the aquifer and increase water costs by 100 percent.

Both CEOs explained that fresh water is not only a danger to underground mining, but it is not used in the separation of potash and salt. “This will have no impact on the aquifer. We use salt saturated brine water to separate the salt from the potash. We want no contact with the aquifer,” stated Avery.

The aquifer will have to be drilled through in order to get to the potash, which lies several hundred feet beneath it. “We will go through a great deal to seal off the aquifer from the mine, using a special casing that allows the water to pass around it. Back in the old days drilling was done using diesel, but that’s no longer done. There will be no contamination. Water shuts a mine down,” reiterated Bleak.

Another concern presented was the containment of wastewater and if that would affect surrounding farmlands.

“What’s key here is reuse. The greatest discharge will be in steam. There really won’t be a significant amount of water. We also won’t be introducing anything into the water that isn’t already there; this will be very different than anything seen in Arizona,” explained Bleak.

Other questions posed involved health concerns for workers and residents from dust and salt that could be picked up in the often powerful winds of the area.

“We’re dealing with salt and water. This is going to be an underground operation, so it’s more about safety. Regarding dust, most roads will be paved, but there will be very little trucking as the potash will be transported by rail,” explained Bleak.

“Most of the equipment being used will be electrical, whereas it used to be diesel. There will be no hazardous chemicals used and salt being the biggest by-product,” added Avery.

Regarding the salt by-product, it was explained that the salt will be held in containment, then sold as road salt to the highway departments. “It’s a break even business, but it’s better than dry stacking. The clay will be stacked separately, making the salt pile reclaimable,” explained Avery.

Allison added that Arizona already produces salt at the Morton Salt facility near Glendale, and that he would visit with them to see what concerns for air pollution exist as part of their operation.

When asked if either of the CEOs planned to provide funding for housing for employees, Bleak responded that his family has already purchased a commercial storefront, as well as several houses in the area as an investment in the anticipated growth of the community.

Avery commented that employees will likely receive a stipend to offset the food and housing costs, adding to community revenues.

The CEOs were also asked if their plans included mine reclamation once the mines stop producing. Both men explained that a reclamation plan is required and that a bond is put up ahead of time to ensure that even if the company no longer has money when a project is finished, funds are available for reclamation.

When a request to have a water park built in town brought some laughter and applause, Bleak used it as an opportunity to explain some of the other aspects that jobs bring to a community.

“One of the biggest impacts will be a boon town effect. This will mean more movie theaters, bowling alleys and other entertainment for the people that live here,” he stated.

Avery added that what will be most impressive is the impact that will take place at the schools through additional tax revenues and opportunities to return home after college for real employment.

Bleak also urged the community to look closely at those individuals who will be running for local offices in the upcoming elections. “It’s very important with the elections that we put people inside of the expansion. We are an exploration company, but we are competing against other companies who have been in place and are expanding. It is key that we push production forward and we need community support for that to happen,” he noted.

At the beginning of the program, Teri Walker, HBDG’s coordinator, made a presentation on the future of Holbrook in which she stated, “This is the time to build community when we all thought community building wouldn’t take place again until things turned around radically in the real estate industry and greater economy….. this could be the stuff of legacy building.”

Ultimately, the story of Holbrook’s future lies with its residents and their involvement in the changes to come. Holbrook has long sought an opportunity to offer its children and grandchildren a reason to return home; that opportunity may now be in the very near future.