Extraction of potash ore is done through two methods. Conventional underground mining is where ore is dug out by large machines and transported to the surface. This method is expensive, but is also the most common. Solution mining is less common and uses hot brine (salt water solution) injected below the surface onto the ore body and then pumps the potash brine solution back to the surface for cooling and separation on surface ponds.
Ore bodies are typically graded by the percentage and tonnage of potassium oxide (K2O) and typically KCl (potassium chloride, or muriate of potassium). Both the more pure potassium form and a water soluable form of potassium, typically potassium chloride (KCl), potassium sulphate (K2SO4 or suplhate of potash, SOP) or potassium carbonate (K2CO3) are listed depending on the source to give investors an indication of the amount of potassium for use in fertilizer.
Predominant potash ore varieties are split into either sylvinite or carnallite resources, two types which occur most commonly. Sylvinite is a mixture of KCl and table salt (NaCl) while carnallite is KMgCl3•6(H2O) or potassium magnesium chloride plus water. As a result, sylvinite is typically valued higher than carnallite as it requires less energy to separate the KCl in sylvanite than it does to separate the magnesium in carnallite. However, both potash formations are currently economically viable resources.
Like phosphate, potash is typically sold by the tonne in agreements signed between suppliers and consumers either through defined contracts or through spot markets. Again, the booming Asian economies of China and India are critical players in the market and will shape the demand function for a long time to come.Derek Lindsay of Arianne Resources weighs in At the Vancouver Resource Investment Conference last month, Derek Lindsay, CFO of Arianne Resources (TSXV:DAN), provided some insight on the difference between the two chemical nutrients in an interview with the Investing News Network.