In its annual report, Rio Tinto announced that its exploration group has discovered a “tier-one” deposit of potash in Saskatchewan.
The find is in the same basin where BHP Billiton is investing $US3.8 billion to develop its own potash mine, the Australian reported.
Rio Tinto called the find the eighth tier one discovery by its exploration group in the past 10 years.
“Drilling results indicate encouraging potash grade and thickness,” Rio said. “Higher nutritional standards, population growth and limited arable land make potash a critical factor in maintaining global food security.”
Rio Tinto's Russian partner, Acron, said there is the potential for a long-life, low-cost mine at the "massive" KP405 deposit.
BHP chief Andrew Mackenzie describes potash as a potential “fifth pillar” of BHP’s commodities business, indicating the potential he thinks the company has in Saskatchewan’s Elk Point Basin.
Rio Tinto sold its potash ground in Canada and Brazil to Brazil’s Vale in 2009 to reduce debt, only to return in 2011 through a joint venture with Russia’s Acron in a deal so small the price and stake sizes have still not been announced, the Australian reported.
There has been little talk of potash from Rio, apart from a brief mention in December by minerals boss Alan Davies, who has taken over the deposit from the exploration unit.
Davies said only that he had an early stage option to expand into Canadian potash. Rio Titno gave little detail on KP405 in its annual report but Acron has filled in the details.
revealed that a deposit with an inferred resource of 1.4 Gt (1.5 billion st) of potash with an average grade of 31 percent had been discovered.
This compares with BHP's 6.6 Gt (8.8 billion st) of total resources at an average grade of 26 percent.
Acron said it was focused on developing the asset.
“This massive potash deposit is located in one of the most favorable potash regions in the world,” the Moscow-based company said.
“Exploration shows that this deposit has the potential to support a world-class solution mine for many years and its technical characteristics point to very favourable operating costs.”
Rio Tinto has 40 percent of the joint venture and reportedly has the potential to earn 80 percent through funding exploration.