Boulby & Woodsmith II

Benefitz Betty's picture

An 'alternative' view ...  Divas eh?

"ICL UK, formerly Cleveland Potash, is the only company in the world currently mining polyhalite - and claims sales of the new fertiliser product are “going well”.

A spokesperson for Sirius said the company did not “comment on market rumours” but was involved in “commercial discussions with multiple partners” at any one time."

The Nitty Gritty via 'Eureka'

"Interesting times ahead and more so now the ICL UK polyhalite seam is on the table. Clearly there will be some serious considerations as to the pros and cons; however Sirius, as pioneers within the polyhalite market, from extraction to production to marketing, are well placed to make a sound evaluation. They are also extremely familiar with the planning processes involved.

One of the pros is it takes Sirius to market immediately and could fast-track an existing TorP/MOU/FSA/LOI. Sirius want to commercially showcase polyhalite as quickly as possible and looking back at Yunnan TCT Yong-Zhe (”TCT”) offtake agreement (June 2013) had envisaged the sale of 1 million tonnes per annum of polyhalite for 10 years from 2017.

This offtake agreement has since been cancelled and replaced with a new agreement (June 2016). What is also of interest is that Dian Huang is a national peony seed oil producer.

Peony Seed Oil

The native Chinese plant has seeds that can be squeezed to make the healthiest kind of cooking oil, according to a new study by Chinese scientists. The researchers found that tree peony seeds yield oil that is has equal portions of omega-3 and omega-6 fatty acids.

The unsaturated fatty acids are essential to human health and genetic analysis indicates that humans evolved on a diet with them in roughly equal measures. But in modern diets, the ratio of the fats has been tipped in omega-6’s favour by more than 15:1.

The imbalance raises the risk of many diseases, including cardiovascular disease, cancer, and autoimmune conditions, according to various studies.

Part of the problem is the kind of cooking oils used in the kitchen, with the omega-6: omega-3 ratio hitting nearly 700:1 in sunflower oil, nearly 600:1 in peanut oil, about 100:1 in corn oil and more than 16:1 in olive oil. In a paper published in Scientific Reports(1) last week, the Chinese researchers said tree peony seeds hit the sweet spot, producing an oil that had a roughly 1:1 balance of omega-6: omega-3 fats.

The study was led by Professor Hu Yonghong at the Chenshan Plant Science Research Centre under the Chinese Academy of Sciences in Shanghai. Hu and his colleagues examined many wild and domestic varieties of tree peony and found all of them contained a large amount of alpha-Linolenic acid (ALA).

ALA is a type of omega-3 fatty acid and has a number of health benefits such as reducing blood lipids and preventing heart disease. The seed oil of a Sichuan species was about half ALA. At present, most ALA used in nutritional supplements comes from fish but that source is under severe pressure.

“Owing to overharvesting and environmental pollution, fish oil can no longer serve as a source of ALA,” the researchers wrote. With potential annual seed production of 57,855 tonnes, tree peony seed oil could save the diminishing fish population in the world’s oceans, they said.

The scientists said the central government was taking the potential of tree peony seed oils seriously and had a national plan to accelerate the development of the industry.

Published: 31 May 2016

Peony Oil (Early research)

Supported by technologies from Beijing Forestry University, the Chinese Academy of Forestry and the State Forestry Administration, technicians in Heze began to study peony seed oil in 2003. Completed in a lab at the Chinese Academy of Forestry in 2006, the results showed peony seed oil is composed of 43.18 percent alpha-linolenic acid, content 61 times higher than olive oil and six times more than soybean oil.

In 2011, peony seed oil was recognized as a new food resource in a statement from the Ministry of Health.

"The peony seed oil industry will help maintain grain and oil safety," says Li Yucai, head of the China Forestry Economy Society. China bought 5.98 million tons of vegetable oil in overseas markets in the first three quarters of 2013, a year-on-year increase of 9 percent, according to the General Administration of Customs.

Further research into the anti-diabetic activity of peony seed oil has also been conducted.(2)

Protein & Vegetable Oil Consumption [China]

Each Chinese resident consumed an average of 18.5 kg of oil in 2012, an increase of 7.5 kg over 2001. The China National Grain and Oils Information Center forecasts the figure will reach 23 kg between 2017 and 2022 as living standards continue to rise.  In addition to containing richer nutrients than the soybeans widely used in China for cooking oil, peony seeds produce more oil. "The oil from one mu (0.07 hectare) of peony cultivation is 3.4 times more than that from soybeans," says Zhang. "And the peony is generally hearty and requires little care. In China, 24 provinces are suitable for planting peonies."  To capitalize on the bright prospects, local governments in China began planting more peonies in 2011.

Peony Acreage, Yield and Outlook [China]

At the end of 2013, a combined 20,000 hectares in Shandong, Henan, Hubei, Gansu, Chongqing and Anhui were growing peonies for cooking oil. They are expected to produce 57,855 tonnes of seeds in 2017 when they begin to produce seeds. (c.f. Soybean 2016 – 11,121 tonnes).  The peony usually takes four to five years to produce seeds. So oil output will be greatly raised when those planted begin to produce. Gansu has released a plan to develop 69,330 hectares for oil-oriented peony cultivation by 2020. Shandong (popl. 96 million) plans to develop 533,300 hectares by 2020.  As a pilot area for developing peony seed oil supported by the Chinese Academy of Forestry, Heze planted 18,000 hectares this year (2014), 62 percent of the city's total. The figure is expected to reach 133,330 hectares in 2020.  Peony oil is also used within the healthcare and cosmetic industries."

Dian Huang had been in polyhalite discussions with ICL (May 2017) and they seem extremely keen to arrange importation of the fertiliser and well in advance at which Sirius can provide it.

Sirius has a TorP agreement with Dian Huang to supply polyhalite from first production, (one million tonnes per annum over the first six years of the contract.), and the agreement identifies Dian Huang as a national peony seed oil producer.

Cultivation of the peony plant is expected to increase rapidly throughout China and polyhalite is expected to play a part in that growth due to the macro & micro nutrients the organic fertiliser provides.

We have also been informed that Sirius has met with ICL in Israel to discuss the ICL polyhalite business. ICL have valued their British mining operations at between $150m and $200m.

ICL Boulby History -  ICL Boulby has had a chequered past which required Health and Safety Executive intervention and improvement notices were issued and complied with over due course. There have not been any prosecutions.

The HSE has an intervention plan for every underground mine in Great Britain, and each reflects the specific inherent hazards and the mine’s previous health and safety performance. The Boulby plans for 2016-17 and 2017-18 reflect the outcomes of the investigations into the recent incidents. HSE inspectors will base their regulatory interventions and their oversight of the mine’s health and safety performance on those plans…

ICL Polyhalite [Polysulphate]

Geology - Polysulphate is the product derived from the polyhalite mineral that lies 150m to 170m beneath the Potash Horizon at Boulby Mine.  [ICL] - Geologists have identified and are continuing to discover an abundance of polyhalite reserves, our new multi-nutrient mineral that we have now turned our attention towards. Our polyhalite is safe to mine and is present in sufficient quantity to invest in the development of its efficient extraction.  So far, we have an estimated 1 billion tonnes of polyhalite resources, some of which we are currently mining, making ICL UK the sole producer of polyhalite worldwide.

Investment - ICL (Polyhalite Apr 2014) ICL to implement £38 million project to boost polyhalite production to 600,000 tonnes a year. PR EN 23 4 14 (4).pdf

Investment - H.M. Govt. - Approved grants include: 1.(Polyhalite Apr 2014) £4.9m - Approved a grant of £4.9 million for the [polyhalite] expansion project.  2. (Apr 2013) £15m - British Government To Provide £15M Support Package To CPL (a Business Unit of ICL Fertilizers) as Incentive to Mine and Process the Polyhalite.

UK Mining Concession (Polyhalite) - Leases with the Crown Commission (Crown Estates) for the offshore rights in the North Sea were recently renewed and expire in 2035. The lease with the Crown Commission includes provisions to explore and exploit the polysulphate (polyhalite) mineral.

Sales - 2016 polyhalite (Polysulphate) generated sales of $25m and were deemed ‘not material to the business’. However ICL plans to increase production up to 1m tonnes by 2019.

What we now have is Sirius who themselves has a TorP to provide 1m tonnes of polyhalite to Dian Huang but not until 2021, and ICL who are in a position to extract 450,000 tonnes (2017), c. 750,000 tonnes (2018) and 1m tonnes (2019), and onward.

Projections - Estimated and based on a joint venture. The assumptions are that Sirius has a ready market and can fast-track a TorP agreement at an average weighted price of $145, ICL polyhalite estimated production of 750,000 tonnes for 2018 and annual operating costs of $45 (c.f. Sirius $32.6 - 10mtpa and $27.6 – 20mtpa)

2018 Estimated Revenue ($)
Polyhalite (tonnes) extracted c.750,000 (est.)
Sales c.750,000 (est.)
Price (tonne) $145
Annual Operating Costs c.$45 (est.)

2018 Pre Tax Profit = (750,000 x $145) – (750,000 x $45) = ($108,750,000) – ($33,750,000)
2018 Pre Tax Profit = $75,000,000 [£55,500,000]

2019 Estimated Revenue ($)
Polyhalite (tonnes) extracted 1,000,000
Sales c.1,000,000
Price (tonne) $145
Annual Operating Costs c.$45 (est.)

2019 Pre Tax Profit = (c.1,000,000 x $145) – (c.1,000,000 x $45) = ($145,000,000) – ($45,000,000)
2019 Pre Tax Profit = $100,000,000 (£74,000,000)

Of course this is just a hypothetical and simplistic JV scenario and profit split would favour the mine operator).

If Sirius were to purchase the ICL UK polyhalite rights then this could complicate the current project with funding requirements and the operation of a second polyhalite mine would need considerable senior management resources from Sirius. Current dilution on existing shares as a result of the Convertible Bonds is 31.2% and shares issued to Hancock will dilute those existing shares by 4.8%.

However, the advantages of a JV are extremely appealing.  ICL UK to maintain the polyhalite mining operations and Sirius can provide the sales. In the case of Dian Huang, for example, ICL UK is not able to provide 1mtpa until 2019 and would they want a single customer? A JV will get polyhalite into China almost immediately and can demonstrate the nutrient benefits to a market that is immense to Sirius. As the multi-nutrient fertiliser value of polyhalite becomes realised then this should be reflected in a higher selling point, and could also lead to further (or conversion to legally binding) TorP agreements for Sirius (mandated lead arrangers (MLA's) for Stage 2 funding would be looking at commitments of between 6-7mtpa dependent on pricing and volume).

Sirius, with their comprehensive agronomy programme, has demonstrated time and time again that polyhalite is a highly effective fertiliser suitable for commercial use on high value crops…perhaps, commercially, that will be demonstrated sooner than the current projection?"

Peony Plant Nutrient Requirements

Peonies that have been growing for a couple of years can exhaust the soil and will need fertilizer. It is not for nothing that the peony has been called a high fertilizer requirement flower. As well as nitrogen and phosphate, top quality peonies require a low salt index and the following macro/micro elements:

Potassium ensures firm leaves and stems and at time of flowering it takes care of, together with phosphate, larger and full flowers. With enough potassium a plant can protect itself better against fungus and bacteria. A lack of potassium will cause yellow leave edges, also leaves will get smaller and stems thinner. Too much potassium causes salt damage and poor plant growth.

Magnesium gives the plant its fresh healthy green appearance. It also has a function for the cells and the firmness of the tissue, and it is a building stone for several enzymes. When there is a shortage of magnesium you will see the leaves turn yellow while the leave nerves will stay green. Too much magnesium does not occur.

Calcium is used by the plant for firmness and build up of the cells. Calcium is very important for the water regulation of the plant and is indispensible during higher temperatures. At a high temperature the plant will evaporate a lot and needs to take in more water. Shortage of calcium occurs when the growth is too fast and the humidity is too high, causing less evaporation in the plant. When the plant cannot evaporate, it can also not absorb any water with plant food. Young leaves will wither, and the plant will be more susceptible for fungus diseases.

Micro elements are the vitamins and minerals for the plant. Micro elements are: Fe = Iron, Mn = Manganese, B = Borium, Zn = Zinc, Cu = Copper and Mo = Molybdenum. All these elements have an important function and are the building stones of the plant. Micro elements are also needed for the water regulation, dividing of cells and metabolism of the plant. The micro elements are absorbed by the plant through its roots so it is very important to grow strong roots on the plant. Because traditional fertiliser contains very little to no micro elements it is important to apply those during every feeding. "

Waste not want not ... cheers (whoever took the time out to resource that valuable information)  consider it nicked & ticked.

The precious v precocious? Flowers and fruit.  Productivity. Indeed Divas aside 'tis the product that is prime.

Other less complicated arguments for the rumoured Joint Venture have been surfacing ;-/

LSE 'Ballio' :  "Lockwood beck is the key intermediate construction shaft for the MTS. This also happens to be coincidentally placed to act as a junction with a future connecting MTS from the NOW Boulby Potash mine.  Before people start banging on about Boubly being old hat, im fully aware...   I think that the potential 10mpta that Sirius expect Boulby to be able to produce in years to come could be piped directly into the planned Woodsmith MTS. This will hugely reduce the 100$/t cost of Boulby's Poly4. No existing Polyhalite caverns exist to speak of at Boulby. Sirius could come in and make the new Poly caverns as modern and efficient as they plan for Woodsmith and bypass the Boulby mine workings apart from access to the cavern level.  Forget about boulby mine, its dead. BUT it is a doorway to another huge untapped Polyhalite resource bordering SXX mineral rights.  Wild idea over."

Rather convenient.

"Whatever next. First we have road salt as a by product, soon we will have a jewellery shop."

fascinating ...

Oh OK ... just a Peak.

Competition? tis healthy for the toes ... 1500 feet tapping away.