March/April 2014

Long-term solution

K+S is building its Legacy potash mine to last

By Eavan Moore

When the German firm K+S set up shop in Saskatchewan, some of the mines under its control in Europe had been operating for a hundred years. The company sees similar long-term potential in the Legacy potash formation it picked up from Potash One in 2011.

At the time of acquisition, Legacy had Proven and Probable Reserves of 160 million tonnes of potassium chloride and another 981 million tonnes of Inferred and Indicated Resources. “It's a huge deposit,” says Sam Farris, vice-president and general manager of operations at K+S Potash Canada. “And that's consistent through Saskatchewan. The quantity and the quality of deposits were two important reasons that brought K+S to Saskatchewan,” says Farris. Currently, he says, assuming annual production of 2.86 million tonnes per year, the mine will have a life of more than 55 years.

Saskatchewan’s potash deposits are the largest in the world. The Legacy property has an advantage in that three layers, also known as members, of the vast Prairie Formation overlap: Esterhazy, Belle Plaine, and Patience Lake. That means one well can extend into all three members, allowing greater potassium chloride extraction for the same investment. The overall combined thickness of the mining zones within the deposits is 33 metres. The ore consists mainly of a mix of potassium-bearing sylvinite and sodium-based halite, as well as a number of interbedded clay seams and anhydrite content. Across all three members, the average potassium oxide content is 18 per cent (or 29 per cent potassium chloride), which is significantly higher than in the German mines operated by K+S.

Solution mining

With an average depth of 1,500 metres, Legacy has the hot temperatures suitable for solution mining, in which injections of hot water will slowly dissolve potassium chloride to form brine-filled caverns. The solution mining process will inevitably pick up sodium as well as potassium chloride, but the design bypasses a 19-metre thick section of halite between the Esterhazy and Belle Plaine members. Pumped out through extraction wells, the ore in solution will travel through a network of pipelines to surface, where it will be dried out and then further processed into three different products: standard and granular potash for the fertilizer market, and a higher-grade industrial product.

Solution mining has lower capital costs and a shorter ramp-up period than conventional mining, and it allows K+S to extract all three potash members simultaneously. Legacy aims to be one of the world’s largest by-design solution potash mines, comparable in size to the Belle Plaine mine operated by the Mosaic Company. Farris stresses that the technology involved has been proven during the last several decades of solution mining elsewhere, particularly for salt mining.

Although the exploration end and the dry process plant look broadly similar to conventional potash mining, the solution approach makes use of drilling and well logging practices common in the oil and gas industry.

“The most specialized thing about it is the cavern engineering,” says Farris. “Solution mining involves monitoring the dissolution process. There are key performance indicators that are being actively monitored for each cavern. The cavern engineers are analyzing and interpreting the results from well-return brine samples and downhole well logs, and adjusting operations based upon these results.” K+S, which operates a number of salt solution mines, has expertise to share with the cavern engineering team, most of whom have already been hired.

K+S has close ties to Germany-based Koeppern, which is supplying the dry process engineering and compaction equipment through a joint venture with March Engineering in Saskatoon. “They’ve supplied much of the compaction equipment in the potash industry over the last number of years,” says Farris.

The wet process equipment and detailed design work is being handled by Veolia, which is working with AMEC design teams in Oakville, Ontario. AMEC is the umbrella contractor for engineering, project management, and site construction management.

Continuous improvement

Although the basic technology is proven, K+S has research and development projects investigating ways to improve the mining process. “There are multiple aspects to it, but a lot of it was focused on understanding the geological characteristics,” explains Farris. Early work was done on core samples in a research facility in Germany, but K+S also has a full-scale test cavern in operation. “This allows us to test maybe a few different ideas and also to verify the performance of the cavern,” according to him.

Some of the R&D aims to increase mining rates, or more thorough extraction, from caverns at some point in the future; Legacy has many decades of life (more than 50 years) based on its current Proven Reserves, and Farris anticipates that there will be continuous improvement of its existing methods.

Cavern development starts in halite and lower grade potassium chloride zones of the deposit, using water as the primary solvent. During the last stage of the cavern’s life, as the ore grade rises, brine solutions are used instead; the sodium chloride in the brine prevents the halite in the ore from dissolving, helping keep the cavern stable. When caverns reach their full size, they are “on par with some of the largest sports stadiums in the world,” says Farris.

For now, the plan is to begin creating caverns in 2014, starting with the higher-grade Patience Lake layer. It will take about two years for water injections to gradually dissolve the caverns to a workable volume. Meanwhile, the company will be building the process plant for a summer 2016 commissioning date.

“The first caverns are ready to produce potash in the summer of 2016,” explains Farris. “And then there's a ramp-up until we reach our full capacity of two million tonnes in 2017. And beyond that, there's a secondary mining phase where we switch to brine-based mining for those caverns that are ready, and we gradually expand to 2.86 million tonnes.” Looking further into the future, the company has the potential to expand production to up to four million tonnes per year.

Potash One had originally planned for the deposit to produce only one type of potash product for the fertilizer market. When K+S came in, that changed. “We have the ability to turn down or ramp up production fairly easily,” points out Farris. “So in times of lower overall market demand, if we choose to turn down production, there's some capability to reduce variable costs.”

For that reason, the process plant is designed for flexibility. On a given day or week, the proportion of different products might change. The originally planned standard potash formula, used for fertilizer, is typically the least processed. A second compacted fertilizer-grade product is sized to enable it to be blended with nitrogen or phosphorus products for large-scale agricultural applications. That product has to be run through a compactor first, as does the third, industrial-grade potash product, which additionally goes through a leaching step to improve its purity to greater than 99 per cent potassium chloride. Industrial potash accounts for around a tenth of the total potash market; it is used as a raw material by the electrolysis industry, which in turn markets its products as raw materials for aluminum recycling, electroplating, water treatment, de-icing, soap manufacturing, food production and many other purposes.

Higher costs

The new process plant design accounts for part of the increases to the estimated capital expenditures that K+S has revealed over the last few years. When it first took over the project, the estimated capital cost was $3.25 billion. In 2013, the company revised that number to $4.1 billion.

Farris says there are three main inputs to the increase. First, Potash One had planned to make a single, uncompacted product; the new design contains significantly more processing equipment. Second, Farris says there was also a “rationalization” from the original estimate to a more up-to-date assessment of the material and labour costs, particularly the cost of building the processing plant.

And third, he says, “a lot of the change is because we’ve invested in our own infrastructure.” As a greenfield project, Legacy requires rail and port connections to be built from scratch. K+S has struck a deal to transport its products via Canadian Pacific Railway to domestic markets and to a port in British Columbia where it will need to develop facilities. Canadian Pacific is building a spur line, but K+S has to provide the export facilities.

In a time when greenfield development projects worldwide have been suspended, and the potash market in particular has taken a beating, K+S is confident that its billions will pay off in the long term. “It isn’t just a 10-year investment for us,” says Farris. K+S has spent a century mining Germany, but Saskatchewan holds its new legacy.

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