Agrowing world population eating better food is opening up mining opportunities in agricultural input materials.
The mining industry has seen the world’s biggest mining company, BHP Billiton, report that it expects to invest “billions upon billions” into the “exciting” potash-mining business and South Africa’s Industrial Development Corporation (IDC) has reported that it will be listing its phosphates business.
Some have called phosphates the all- purpose chemical and others refer to it as the farmer’s best friend.
Now, backed by an 800% rise in the price of phosphates, Australian junior Bonaparte had journalists at the Africa Downunder conference rushing for their pens as it announced a pioneering project to mine phosphates off the sea bed of Namibia’s continental shelf.
Bonaparte, a small company with $4,7- million in the bank, led by South African Mike Woodborne, believes that the phosphate- mining project may initially not require an investment of more than $100-million.
From early 2007, the price of phosphate rock has increased 700% to 800%, from $50/t to $400/t.
Driving the increase is world population growth and the requirement to feed that popula- tion, increase the quality of life, fertilise the growth of biofuels in the face of rising oil prices and make agricultural land more productive in order to meet these demands for population growth and feed.
Woodborne reports that the world population is forecast to grow by more than 42%, to nearly 9,4-billion, in 2050, and coupled with this is the reality of phosphates and phosphorus being essential fertiliser ingredients in agriculture.
“There is no substitute for phosphorus in agriculture,” he avers.
The phosphates industry, he says, thus, has very strong fundamentals.
“While nobody is willing to say where the price will settle, all the drivers that have supported the increase over the last four years are going to leave it well above the former phosphate baseline price of $50/t,” he says.
Clearly, more phosphate is going to be needed and that creates a window of opportunity for Bonaparte, with concomitant potential benefits for neighbouring Namibia.
Total demand for phosphate rock, Woodborne says, is expected to increase by 58,9-million tons between 2006 and 2021.
With these kinds of price rises, people have accelerated their plans, new mines are being sought and new projects could be brought on line from 2012 and beyond.
The resource off the coast of Namibia was discovered in the 1970s and detailed studies were done on the deposits.
The two sediment areas off the Namibian coast that Bonaparte is studying are part of a broader knowledge of phosphate deposits around the globe on the continental shelves.
However, these have been considered outside the range of existing technologies.
“But that is not the case any longer,” says Woodborne.
The deposits are accessible with current marine mining and dredging technologies that are being used in water depths of up to 600 m, he adds.
The Tenements
The tenements Bonaparte holds in the phosphate deposits off the southern part of Namibia total 10 00 km2 – 5 000 m2 have been issued and 5 000 km2 remain on application.
These are held in joint venture with Tungeni Investments, Bonaparte’s Namibian partner.
Though the deposits are generally located in water depths of 100 m to 250 m, the deposits that Bonaparte has in specific focus – one of nine properties under development – are in a depth range of 185 m to 220 m.
The initial area of focus is the Meob project.
Bonaparte did reconnaissance work in December 2007 to verify the regional mapping trends and showed that the levels of phosphate in the recovered samples are between 1% and 18%.
A basic screening out of anything larger than a millimetre yields a phosphate enrichment of up to 24% and further removal of shell components yields enrichment of up to 35%.
“That’s a pretty simple process; there is nothing complicated about the deposit and it sits in the sea bed in an unconsolidated sediment,” Woodborne says.
Bonaparte has a sample programme under way to refine a resource as an initial step towards prefeasibility stage.
“The marine sampling and definition of resource are no different to what we do on land.
“The fact that we are at sea just means that we take a different route, bumpy at times, but it’s the same process that we follow.
“We take samples and put those on to the vessel using very standard techniques used substantially to find diamond resources,” he says.
The company is using sample spacing and geostatistical methods suitable for compliant resource estimates.
“As soon as you say ‘underwater’ people say, ‘Wow, how are you going to get that out?’” he says.
Dredging and mining have for long been associated.
“It’s not uncommon to see dredgers floating in ponds where alluvial deposits such as heavy minerals or tin or gold are being mined.
“So to stir up the slurry and to process it on the dredger is commonly used mining,” he says.
It is proposed that enriched slurry be processed on a ‘mother’ mining vessel and transported to the shore in ‘sister’ boats for deposition onto a stockpile of pre-enriched phosphate.
Bonaparte estimates that it will take four to five months to move seven-million tons of phosphate material off the sea bed.
Once stockpiled on shore, it appears to be a simple process to produce a further-enriched deposit for export.
Unlike land-based phosphate, marine-based phosphate appears not to require crushing of any significance.
The company is looking to developing an “uncomplicated, unconsolidated” phosphatic sediment deposit working within the realm of available technologies.
A small revenue stream from diamond activities in South Africa is supporting the company as it develops the phosphate business.
It is also looking to develop an equivalent phosphate deposit off the coast of Peru.
Namibian Treasure
Australian Stock Exchange-listed, Bonaparte expects sample assay and resource delineation to be completed in the fourth quarter of this year.
Woodborne describes the presence of phosphates as Namibia’s new “underwater treasure”, in an obvious reference to the fact that diamonds are already successfully recovered off the country’s sea bed.
It has four exclusive prospecting licences (EPLs), covering 4 000 km2 off the coast of Namibia, in hand and is awaiting the processing of a further five EPLs in its Meob project area, south of Walvis Bay.
The four EPLs are valid up to July 2011, with two of the EPLs at Meob and the other two in the Rocky Point project area, which incorporates the core of the marine phosphate zone north of Walvis Bay.
Bonaparte has designed a combined grab and core sampling programme to better define the phosphate grade distribution, which will allow a resource estimation and also provide bulk samples for metallurgical and beneficiation testing.
Woodborne says that the company has a short-term aim of becoming the first marine phosphate-miner in Namibia.
“We are on track with our plans for an accelerated programme to complete resource estimation and development of the existing Meob project area off Namibia,” he says.
Terrestrial Surge
Meanwhile, also on the phosphates front, South Africa’ IDC plans to list its majority-owned phosphate and phosphoric acid producer Foskor on the JSE in 2009, after having transferred equity to employees and community groups.
Foskor’s strategic partner, India’s Coromandel Fertilisers, is expected to increase its shareholding to 15%.
The valuation of Foskor rose by more than 400% in the year to March, to R9,5-billion, and may more than double upon listing, after the fertiliser industry’s prospects improve, IDC CFO Gert Gouws says.
Foskor doubled its operational income to over R1-billion for the year, after having posted an operating income of R514-million in the 2007 financial year.
IDC CEO Geoffrey Qhena says that Foskor’s flotation may be the biggest new listing the JSE has seen.
Under the 2005 business assistance agreement that Coromandel signed with the IDC to help turn Foskor around, it acquired an initial 2,5% in equity, with the option of increasing this if it helped turn around the company’s fortunes.
IDC chief economist Lumkile Mondi says that Foskor will do a black economic- empowerment deal, which would see workers and communities near its operations holding 26% to 28% of the company, along with strategic equity partners.
The IDC will maintain a strategic holding of 26%.
Mondi said that the company is looking to a free float of 26% to 31%.
BHP Billiton CEO Marius Kloppers says potash-mining is like coal-mining
Demand for potash has surged, driving prices into orbit, after the market spent the last three decades in surplus, with the last new mine being built more than 20 years ago.
Kloppers says that, just like coal-mining, a continuous miner is installed and basic bord-and-pillar mining undertaken.
“You convey it out, you dissolve it, you recrystallise it, and that’s the product,” he says.
BHP Billiton already has a $200-million-plus potash programme under way, $100-million of which will be invested in the next 12 months, primarily to drill 23 new holes in newly acquired Anglo Potash, which gives it access to 7 338 km2 of highly prospective explor-ation permits in the immediate vicinity of existing major potash mines in Saskatchewan, Canada, domicile of the world’s biggest potash mines, although some excellent potential is unfolding in Africa’s Congo Republic.
Kloppers tells Mining Weekly that he is “very excited” by potash, the price of which has been soaring as a result of the population of industrialising countries like China becoming richer.
“As people become richer and industrialise, they tend to have a higher level of diet,” Kloppers says, which means, basically, that they eat more meat. This requires more cereals to be planted for animal feed, which creates demand for more potash fertiliser.
