By James Wellstead — Exclusive to Potash Investing NewsDriven by population growth and the demand for increasingly resource-intensive diets, global crops are being increasingly taxed and expanded in order to meet rising demand.
Australia-based potash junior Elemental Minerals (ASX: ELM,TSX:ELM) believes its high-grade sylvinite and carnallite formations on the west coast of the Republic of Congo are an exception. Elemental's CEO, Iain Macpherson, claimed that “there is room for new [potash] production coming into the market,” and “we believe Elemental is one of the best greenfields out there.” Traditionally focused on oil, new markets like the Republic of Congo have seen a rise in potash exploration and development projects in recent years. These markets are especially sought after thanks to their relative proximity to emerging economies that are driving potash and fertilizer demand. The recent release of Elemental's Phase 2 drill results at the northeast end of its developing property at Sintoukola, which has assured the targeted addition of between 320 million and 1.08 billion tonnes of sylvinite mineralisation grading between 19 percent K 2O (30.15 percent KCl) and 21 percent K 2O (33.33 percent KCl), is proof of just how much potash supply exists in traditionally undeveloped regions. Juniors seeking finance Potash projects, especially greenfields, face real challenges in accessing financing. Due to the large capital expenditures for underground or solution mining and various processing techniques, potash production is typically dominated by a few large, vertically-integrated companies. Macpherson alluded to the financing challenge, suggesting that the key risk for Elemental was “the ability to finance the project in the time that it needs to be done.” This was more important than the risks related to the project itself or the overstated political risks of operating within the Republic of Congo.