kevin stone minerals and metals sector, natural resources canada october 24, 2011
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Potash Development Aboriginal Entrepreneurs Conference and Tradeshow Workshops Session 2 – Potash Development in Saskatchewan. Kevin Stone Minerals and Metals Sector, Natural Resources Canada October 24, 2011. POTASH IN CANADA. Canadian Potash. - PowerPoint PPT PresentationTRANSCRIPT
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Potash DevelopmentAboriginal Entrepreneurs Conference and Tradeshow
Workshops Session 2 – Potash Development in Saskatchewan
Kevin StoneMinerals and Metals Sector, Natural Resources Canada
October 24, 2011
POTASH IN CANADA
3
Canadian Potash
Potash is the No.1 commodity by production value among all minerals, valued at $5.7billion In 2010
Canada is the world’s largest producer, accounting for 30% of the world total in 2010
Canada is the world’s largest exporter, accounting for 37% of the world total in 2010
Canada has the world’s largest production capacity, accounting for 35% of the world total in 2011
Canada has the world’s largest potash reserves and reserve base, accounting for 60% of the world total based on the US Geological Survey
4
Potash Prices
Sources: NRCan, FERTECON
Potash Contract Prices (Muriate of Potash) January 2004 - October 2011
0
100
200
300
400
500
600
700
800
US$
per
tonn
e M
OP
Vancouver Baltic Black Sea
Contribution to Economy
Saskatchewan
Source: Saskatchewan Potash Producers Association
6
Canada Potash Operations
Saskatchewan 10 New Brunswick 1
11 mining/milling
operationsin Canada
PotashCorp 6Mosaic 4Agrium 1Canpotex – Offshore Marketing
Conventional 9Solution 2
POTASH DEPOSIT
8
Saskatchewan Prairie Evaporite
1973 Provincial Estimate 107 000 Mt KCl (66 000 Mt K2O equivalent)
Ore grade: 42% KCl (25% K2O)Depth: 900-3000 metres
9
USGS Estimate of Global Potash Reserves and Reserve Basemillion tonnes K2O, at the end of 2008
Canada, 11 000
Canada, 4 400
World Total, 18 000
World Total, 8 300
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
Reserves Reserve Base
mill
ion
tonn
es K
2O
Potash Reserves and Reserve Base
Source: USGS
USGS estimates total at 26,300 Mt K2O (8,300 Mt reserves and 18,000 Mt reserve base)Canada has 15,400 Mt (60% of the world total)
DEMAND FOR POTASH
11
Potash Use About 95% of potash is used as a fertilizer in agriculture Smaller amounts are also used in manufacture of potassium-bearing
chemicals such as detergents, ceramics, and pharmaceuticals as well as water conditioners, de-icing salt, and etc
Global leading potash users are those economies with large agricultural sectors such as China, India, Brazil, the US, Indonesia and Malaysia In the US, more than 45% of potash is applied to produce corn In China, 50% of the potash is applied to produce fruits and vegetables, and
28% to produce rice In Brazil, more than 75% of the potash is applied to produce soybean, sugar
cane and corn In Malaysia and Indonesia, oil palm accounts for more than 70% of potash
consumed. All major consuming countries lack of potash resources and need to
import potash to support their agricultural production
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Major Potash Consumers
Sources: NRCan
Estimated Apparent Potash Consumption and Imports, 20109.3 9.1
7.3
8.2
5.2
6.76.1
2.2 1.9
6.1
2.2 1.9
0
1
2
3
4
5
6
7
8
9
10
US China Brazil India Indonesia Malaysia
Mt K
Cl
Apparent Consumption Imports
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World Potash Consumption
World Potash Consumption 1980-2010
0
5,000
10,000
15,000
20,000
25,000
30,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
000
tonn
es K
2O
Sources: IFA, NRCan
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Forecast Demand for Potash
Sources: IFA, NRCan
Forecast World Demand for Potash 2011-2016
44,167
53,65755,917 57,660 59,352 60,822 62,500
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2010 2011 2012 2013 2014 2015 2016
000
tonn
es K
Cl
PRODUCTION & PRODUCERS
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World Potash ProductionWorld Potash Production 2001-2010
43,099 44,14446,420
51,83654,344
48,795
55,400 54,164
31,877
53,302
0
10,000
20,000
30,000
40,000
50,000
60,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 p
000
tonn
es K
Cl
Sources: IFA, NRCan
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Potash Producing Countries
Sources: IFA, NRCan
Potash Production by Country 2010
663
670
740
1,005
1,418
1,943
3,256
3,908
4,936
8,705
10,214
15,568
0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000
Brazil
UK
Spain
USAChile
Jordan
Israel
ChinaGermany
Belarus
Russia
Canada
World total production 53.03 Mt KCl in 201053.86 Mt KCl 2008
12 countries produce potash in 2010
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Producing Companies
Source: NRCan, IFA
Global Potash Producers 2010 Production Capacity
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000
LAOSUZBEKISTAN
VALE (BRAZIL)INTREPID (US)
SQM (CHILE)AGRIUM (CANADA)
APC (JORDAN)CHINA
ICL (ISRAEL, SPAIN, UK)K+S (GERMANY)
BELARUSKALI (BELARUS)MOSAIC (CANADA, US)
URALKALI (RUSSIA)POTASH CORP (CANADA)
000 tonnes KCl
CAPACITY DEVELOPMENT
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Forecast Capacity Increase - World
Source: IFA, NRCan
Forecast Increases of World Production Capacity and Capability, 2011-2016
68 7077
8290
95
129
6671 75
8187
100
0102030405060708090
100110120130
2010 2011 2012 2013 2014 2015 2016
mill
ion
tonn
es K
Cl
Capacity Capability
Actual
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Forecast Capacity Increase - Canada
Source: NRCan
Produciton Capacity Increase Forecast (Canada)
24.4
30.8 32.334.334.8
38.336.8
40.8
0
5
10
15
20
25
30
35
40
45
2010 2015 2017 2020
mill
ion
tonn
es K
Cl
Producers Expansions Incl BHP Incl BHP & K+S
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Forecast Demand-Supply Balance
Sources: IFA, NRCan
Forecast World Demand and Supply Balance (Production Capability) 2011-2016
44,167
53,657 55,917 57,660 59,352 60,822 62,50067,995 65,727
70,89875,057
80,50787,242
100,000
0
20,000
40,000
60,000
80,000
100,000
2010 2011 2012 2013 2014 2015 2016
000
tonn
es K
Cl
Potash Demand Potash Supply (Capability)
POTASH & ABORIGINAL PEOPLE
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Benefit for Aboriginal People
Potash mining provide high paying jobs which will improve quality of life for Aboriginal people
Potash mining provide jobs for life which will provide stable employment for Aboriginal people
Global demand for potash is forecast to continue to grow with the highest growth rate among three essential nutrients
Saskatchewan’s massive potash deposit will support a long term production
Saskatchewan is in the unique position to capture the global wave and benefit from it
Potash will bring economic benefits for Aboriginal people in Saskatchewan, the province, Canada, and all Canadians
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Encanto
Encanto Potash Corporation was created to work with First Nations in Saskatchewan to develop potash resources on their lands
The exploration has been advancing well
Source: Encanto
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Challenges of New Entry
High capital cost to build a new potash mine Current estimate is between $1.5 and $2 billion to build a 1-Mt
capacity potash mine Longer lead times for new mines
3-5 years for sufficient exploration work for a mine construction decision
Minimum 5 years to build a conventional underground mine Minimum 4 years to build a solution mine Minimum 7 up to 10 years for a new mine coming on stream
Rising cost of construction materials, labour, equipment, supplies and energy
A long time to recoup the investment
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Summary
Global demand is forecast to continue to grow with the highest growth rate among three essential nutrients
Canada is in the unique position to capture the global wave and benefit from it
Potash will bring economic benefit back to Canada and Canadians
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Contact
Kevin StoneSenior Commodity AnalystMinerals and Metals SectorNatural Resources Canada
580 Booth Street, Ottawa, Ontario K1A 0E4Phone: 613-992-5199Fax: 613-943-8450Email: [email protected]