Sulphate of potash (SOP) companies are set to benefit from reduced potash rental rates in Western Australia early next year after the existing rate was deemed “inappropriate”.
Potash projects that are granted a new class of mining lease for restricted minerals will pay only $2.32 per hectare for the first five years of the lease, and then $4.64 per hectare thereafter.
The existing rental rate for potash projects is set at a significantly higher price – $18.70 per hectare – in Western Australia. This is considered too high for industrial minerals in brine by the McGowan Government.
Brine operations require larger mining leases than other forms of mining.
In welcoming the change, Australian Potash chief executive Matt Shackleton said the company looked forward to moving ahead with the development of its exciting Lake Wells SOP project.
“[Australian Potash] thanks the WA Government for its support of the industry as a whole given the importance of potash for Australian and global agriculture,” Shackleton said.
“This decision can further reduce the cost of our lowest cost quartile production profile, making this an even more internationally competitive project.”
The government initiative also comes at an opportune time for Salt Lake Potash, as the company is set to accelerate works at Lake Way.
Salt Lake may consider expanding its operation into larger scale production as it moves into the construction of the Williamson Ponds and “whole of lake” resource program.
The company believes the government’s move will further de-risk the development of Australia’s potash industry.
This decision also encourages Agrimin to submit its mining lease application for the Mackay SOP project, once the reduced rental rates come into effect next year.
Agrimin chief executive Mark Savich said, “The development of the Mackay SOP project will include a large investment in regional infrastructure extending from Lake Mackay to Wyndham, and will create long-term employment and economic opportunities for several [Western Australia’s] most remote communities.
“This rental reduction is an important milestone in facilitating the successful development of the Mackay SOP project, which has potential to become the world’s largest and lowest cost supplier of seaborne SOP.”
Western Australian mines minister Bill Johnston said potash projects generally have a mine life that spanned 30 to 40 years, which would work favourably for local communities and to sustain jobs in the state.