Phosphate Mining Goes Deep Sea

By James Wellstead — Exclusive to Potash Investing News

Phosphate Mining Goes Deep Sea

With developing countries pushing for more resource-intensive foods, phosphate miners and fertilizer producers have begun to pursue deep sea phosphate reserves in a number of locations.

Deep sea and offshore mining are not new to the resource industry. Offshore oil and gas operations began in the 1890s and have become a cornerstone of the oil market. More recently, precious and base metals have moved offshore, with companies like Nautilus Minerals Inc. (TSX: NUS,LSE:NUS,FWB:N9M) conducting gold and copper seabed explorations that borrow from the offshore oil and gas industry.

While the world has long been aware of the existence of marine phosphates, which are typically found in the first 1,000 meters of the marine zone, few offshore projects have played much of a role in phosphate markets.

Currently, a number of projects are in operation. One of the most advanced is UCL Resources Ltd's (ASX: UCL,FWB:UNM) Sandpiper marine phosphate project off the coast of Namibia. Operating its project approximately 40 to 60km off the coast in waters 180 to 300 meters deep, the project is fairly competitive, with an FOB cash operating cost of approximately US $57/ton, and production of 3MT/year of over 20 percent P₂O₅ phosphate rock on a 60 percent recovery ratio.

More recently, other developers are testing the limits of deep sea phosphate mining by going even deeper.

Digging deeper in New Zealand

New Zealand is leading the charge in marine phosphate exploration, with mining hopeful Chatham Rock Phosphate Ltd. (NZAX: CRP) recently reporting that it has secured funding for its 2012 work program, which is to focus on continued exploration and environmental impact data collection.

US investment group Subsea Investments II announced that it has bought 11.4 million shares of Chatham for US $0.20 apiece to raise $2.28 million, as well as another 11.4 million unlisted three-year options for exercise on a one-for-one basis at $0.30 per share.