By James Wellstead — Exclusive to Potash Investing News
With its attention focused on Chatham Rise, a portion of seabed on the east coast of New Zealand's South Island, Chatham project manager Chris Castle believes underwater mining could begin as early as 2013.Current scenarios assume production levels of 1 to 1.5 million/t annually from the 4,726 square km permit site, with a total estimated local resource of 25 million tonnes of 20 to 24 percent P₂O₅ rock phosphate. The resource could produce enough phosphate for New Zealand for up to 30 years. While New Zealand seems an unlikely place to begin mining deep sea phosphate, its phosphate fertilizer market currently relies on Moroccan phosphate imports to supply nearly all of the one million tonnes of phosphate the country requires each year. The distance between the two countries is just under 20,000 km, and reducing transport costs could open the doors for a wide range of projects in the South Pacific region. Although it is still too early to provide any firm numbers, one company stated it believes it could mine for between US $90 and $120 per tonne. Currently, the cost of freight alone from Morocco stands around US $70 a tonne. Manageable risks But a number of risks are inherent to the project. Seabed mining presents higher risks than onshore mining due in great part to the absence of control over the work environment. This is especially true since Chatham is exploring a section 400 meters below the Pacific Ocean. That depth makes the project the world's deepest phosphate mining project. Outside of technical risks, the company still has to overcome barriers to raising cash overseas and selling the government on a relatively untested phosphate mining process in the middle of the country's most important fishing grounds. However, despite these concerns Castle believes the risks "appear manageable” thanks in part to the use of well-established seabed mining technology and the help of a variety of environmental and marine consultants who will advise on how best to reduce any environmental risks.
Those environmental risks will likely become more clear this year as Chatham spends up to US $10 million on environmental, geotechnical, and other projects as it moves towards its mining licence application and a pending environmental impact assessment.Securities Disclosure: I, James Wellstead, hold no direct investment interest in any company mentioned in this article. Phosphate Mining Goes Deep Sea from Potash Investing News