Vale postpones Kronau potash project in Saskatchewan
Brazilian mining company Vale announced it will wait until market conditions improve to continue developing its Kronau project in Saskatchewan as low potash prices have made the mine uneconomic, the miner said in a public letter to the local community.
The $3.5 billion mining project is expected to produce 3-4 million tons of potash annually for more than 40 years. As of October, Vale had entered the final feasibility stage for the project and depending on the outcome a final investment decision to proceed into construction would have be made by 2016.
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“It’s still a very promising project with the economics and everything, there just isn’t an opportunity to start any new construction next year,” said Matthew Wood, senior project leader at Vale for the Kronau project.
Kronau was projected to create 2,000 construction jobs and 350 permanent jobs. Vale currently has a team of 30 people in Saksatchewan.
“We’re just sort of evaluating what we can do with those staff, whether we can reassign them other places, whether we can find other opportunities for them,” Wood said.
In 2012, Vale momentarily postponed the potash project at Kronau citing the need to curb “its appetite for an accelerated timeline.”
"We had originally planned for the project to start early construction potentially by 2013, and that has been postponed for the time being and the commitment to the project has not lessened, just maybe our appetite for an accelerated timeline has," said Lara Ludwig, the community consultation specialist with the Kroneau project.
Prices for potash are currently in a multi-year slump, with many producers of the fertilizer ingredient suffering due to weak demand and higher costs.
“Once they get going, then it’s going to help the surrounding towns with potash royalties and now everything’s put on hold,” said to Erwin Beitel, the reeve of the R.M. of Lajord which covers the communities of Kronau, Riceton, Gray and Davin.
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According to Beitel, Vale told leaders in the community several weeks ago that the project will be paused. He says they have no idea what the timeframe will be to start back up again, but he’s optimistic that it will.
“It’s just going to be a wait and see situation and who knows, in two years, four years, 10 years – they’ll come out. This has been suspended before and then started up again,” he said.
Gerald Group resolves iron ore dispute with Sierra Leone
Gerald Group, the US commodity trader, will pay Sierra Leone $20mn and cede a 10% stake in an iron ore project as part of the resolution to a nearly two-year dispute that led to the shutdown of production, the two sides revealed.
Gerald's wholly-owned subsidiary SL Mining filed for arbitration in August 2019 over a royalty payment dispute and suspended the Marampa mine the following month. Sierra Leone's government responded by cancelling its mining licence.
As part of the agreement signed on Friday, Sierra Leone will take a non-dilutable 10% stake in a new company that will replace SL Mining and resume operations at Marampa by June 1, Gerald said in a statement.
Gerald will make two $10mn payments this year and will have the immediate right to ship its current stockpile of about 707,000 tonnes of iron ore, it said.
Both sides will withdraw their legal claims before the International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID), the statement added.
Gerald’s chairman and CEO Craig Dean commented: "I am delighted that we have been able to resolve our differences and have a fresh start and new beginning with the government of Sierra Leone."
Sierra Leone's Mines Minister Timothy Kabba told a news conference on Tuesday that the agreement was a milestone for the country.
"Whatever the pain we may have borne or dreaded throughout these two years ... this outcome justifies our action," he said.
Gerald estimates that Marampa holds about 1 billion tonnes of iron ore with a potential lifespan of 30 years.
Back in 2019, Dean spoke with Mining about the development of Marampa and commented: "SL Mining offers a substantial opportunity for Gerald Group as our Marampa mine in Sierra Leone is set to deliver six million tonnes of high-grade iron ore during its operational life. If you analyse the iron ore market it has transformed, even from a couple of years ago when prices were very low. Now prices have stabilised we’re in a favourable position with our first shipments leaving for China.
"Our goal is to make ‘Marampa Blue’ an internationally recognised premium grade iron ore brand. We intend to expand the delivery of high-grade 65% iron ore concentrate to markets in Europe and Africa.”