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Focusing on the Dallol Potash Project in Ethiopia
Message: The outlook for potash prices has taken a ‘cautiously’ optimistic turn
The outlook for potash prices has taken a ‘cautiously’ optimistic turn
Rio Tinto (‘Rio’, NYS: RIO) has decided to proceed with its plans to build a potash mine. The Australian Rio will work with its Canadian joint venture partner North Atlantic Potash company (an Acron Group subsidiary) to develop the Albany Project using solution mining. The Albany deposit is said to hold inferred resources of 1.4 billion tons at an average grade of 31% KCl with about 30% recoverability. Rio Tinto’s entry into the North American potash industry has added more pressure on what seems to be an already oversupplied sector. In 2013, BHP Billiton (NYSE: BHP) decided to build what will be the world’s largest potash mine; that project alone threatens to break the model preferred by CANPOTEX (the pricing consortium that includes PotashCorp, Agrium and Mosaic), which relies on regulating supply to sustain price rather than compete on the basis of lower prices.
- See more at: http://investorintel.com/potash-phosphate-intel/outlook-potash-prices-taken-optimistic-turn/#sthash.3QXk4gIy.dpuf
This is good news for all of the junior potash projects heading toward production stage such as Allana Potash with its Danakhil Project in Ethiopia (TSX: AAA | OTCQX: ALLRF) or IC Potash’s Ochoa Project (‘ICP’, TSX: ICP | OTCQX: ICPTF) in New Mexico. Yet, the various uncertainties about the new large projects will keep the longer term pricing focus on the timing and possible revisions of the giant mining firms and legacy potash plays.
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