JOHANNESBURG (miningweekly.com) – South Africa is likely to play a significant role in the development and construction of the large new potash mine and processing plant that is being planned in the Republic of Congo (RoC) at an expected capital cost of $2-billion.
Potentially one of the lowest operational cost potash projects in the world, the large Kola project being developed by the triple-listed Kore Potash has major advantages of being close to the coast, high in grade, shallow and directly opposite the export destination of Brazil.
The French engineering and construction consortium of Technip FMC, Vinci Construction Grands Projects, Egis International and Louis Dreyfus Armateurs are close to completing the definitive feasibility study (DFS) for the potentially two-million-tonne-a-year operation.
Only 300 m deep compared with the many potash mines that are treble that depth, it is 35 km from the coast, compared with the 1 000 km-plus of many other potash operations.
Its 35% potassium chloride (KCL) grade compares with the below 30% KCL grades elsewhere, with its purity allowing Kore to discharge the brine into the sea.
Kore plans to produce potash at the relatively low cost of $100/t for delivery to Brazil, which is in conveniently close shipping distance.
It has big cornerstone investors in the Sovereign Wealth Fund of Oman and Chilean potash company Sociedad Química y Minera de Chile (SQM), which exports to 130 countries.
Now properly capitalised, and listed on the Johannesburg Stock Exchange, in addition to the Australian Securities Exchange and London’s Alternate Investment Market, the business of Kore Potash is looking up.
Under Australia’s Elemental Minerals some years back, there was at one stage doubt about the the project being developed. But under the recapitalised Kore, a fixed price engineering, procurement and construction contract is expected to emerge in the next three months from the DFS being drawn up by a French engineering and construction consortium with extensive RoC experience.
Steps are being taken to bring the project to constructing as quickly as possible.
During 2017, Gavin Chamberlain, who has huge experience in mining construction across Africa, came on board to join CEO Sean Bennett, coinciding with a strengthening of prices on a shortage of supply and good demand dynamics.
The RoC government’s Mining Convention is backed by international arbitration but what is really important is the support the project has reportedly received from the RoC government.
When Kore negotiated the convention, all of the departments of the RoC government were represented round the table and a convention was arrived at after three days of negotiation.
“There aren’t many governments that are that constructive. They’ve been fantastic through this process, and their support has helped to fast-track all the different aspects,” Bennett told Mining Weekly Online.
The Export Credit Insurance Corporation (ECIC) of South Africa funding is quite important to Kore and the project may yet see a South African company being subcontracted to the French or working directly for Kore.
There has been considerable interest from South Africa for materials handing supply. Typically, the French companies involved have done a lot of oil and gas work, but not conveyor-type work. Local South African companies are interested in the overland conveyor and also in the conveyor packages within the plant.
Potentially, steel supply out of South Africa could still be competitive and, if it is, it will be encouraged.
The Kore team is South Africa-based and the JSE listing has strengthened the South African involvement, as has the discussion with the ECIC and with local developmental finance institutions and procurement companies.
“There’s a huge amount of experience here in terms of engineering, so I think South Africa is going to play an important part,” said Bennett.
Currently, the life-of-mine is more than 20 years, but once more drilling is done, that could increase significantly. The amount of resource in Kola, the main project, compared with the total resource, is only a small fraction.
The project will be employing something approaching 4 000 people for the build and 1 000 going forward, and many spin-off community benefits are envisaged.
“We really want to set up something that will go on way beyond our lives. It’s going to be of significance to the RoC and that’s why we are getting so much government support,” Bennett commented to Mining Weekly Online.
The foundation of the debt will be export credit agency debt, that is, government-backed debt to fund procurement, which is why Kore has been speaking to the French government in relation to French procurement, the South African government about South African and African procurement and also to the UK government and other governments.
“What we’ve had is very positive responses,” said Bennett, with French procurement expected to be $500-million to $700-million.
Feedback on the raising of debt is described as been good and major equity of $600-million to $700-million will be needed early next year.
“There’s a big cheque that’s coming but this is a massive project and it’s a very profitable project,” said Bennett.
Cornerstone investor SQM can also offer the company helpful processing expertise. July 1, 2019 is the DFS date for the day of the first spade in the ground and July 2023 the month when commercial potash will be processed through the plant. As part of the mine footprint development, a stockpile will be created and used for commissioning purposes. Overall, the build-up of the mine is probably going to be around 18 months in total, from the start of production to steady state.
Kore chairperson is David Hathorn, who formerly headed Mondi, a FTSE 100 company. Board membership is expected to be expanded in the next few months.