New Legislation Spurs Interest in North Dakota Potash

By Leia Michele Toovey-Exclusive to Potash Investing News

A new potash tax and regulation legislation in North Dakota has piqued worldwide interest in the state’s local potash deposits. Last month, the state approved a two percent tax on potash mining, and has auctioned off 4,000 acres in Burke County, North Dakota. North Dakota is a region expected to host valuable potash reserves. According to the state Land Department, since the tax was approved, the state office has been bombarded with information requests from people all around the world. “I’ve been getting a lot of calls with people asking, ‘What’s going on in North Dakota, and how can we get in on this deal?’” said Drew Combs, the agency’s director of minerals management.

North Dakota borders the province of Saskatchewan, the world’s biggest producer of potash. Potash deposits in North Dakota are believed to be present in the Devonian Prairie Formation, just like Saskatchewan, according to a comparison of gamma ray logs from the state and the province. The main difference between the potash beds in North Dakota and nearby Saskatchewan is the depth at which they occur. Depths of North Dakota potash  range from about 5,800 to12,500 feet, with the shallower deposits  near the Bottineau-Renville County  line in north- central North Dakota and the deepest in Dunn and  McKenzie Counties in western North Dakota. The Saskatchewan potash beds are about 5,000 feet beneath the surface. Three companies considered mining North Dakota potash in the 1960s and 1970s but believed it was too deep. Now, advancements in solution mining, coupled with the high-price and demand for the fertilizer has made taking a second look at the state’s potash reserves worth-while.

Currently, there is no operational potash mining in North Dakota; however, there is a great deal of activity just across the border in Saskatchewan. The potash deposits in Saskatchewan are at a shallower depth than those in North Dakota, however, the depth is great enough that both solution mining and conventional mining processes are used. Conventional mining is used when potash deposits are closer to the surface, solution mining when the resource needs to be extracted from a greater depth. In nearby Belle Plaine, Saskatchewan, conventional mining is taking place for deposits at depths less than 3,500 feet, and solution mining is taking place at beds with depths greater than 5,000 feet. At the namesake Belle Plaine Mine, owned and operated by Mosaic (NYSE:MOS) conventional mining was used at first- but once the shallower resource was extracted, the project changed gears to a solution mining operation.

Last year, Dakota Salts LLC, a unit of London-based Sirius Minerals Plc. (LON:SSX), received the first potash drilling permit in the state of North Dakota since 1976. Prior to Dakota Salts’ involvement, only four test wells had been drilled in the state. Dakota Salts lobbied for the tax rate and was the company that asked the state to auction off the rights to mine under the 4,000 acres of land. However, Dakota Salts did not bid in the April auction of state-owned mineral rights. According to a company spokesman the company decided that it wanted to conclude its current study before leasing more land. The company said it has leased more than 6,000 acres in northwestern North Dakota for salt and potash mining. All of the land leased in the recent auction was in Burke County, an area immediately adjacent Saskatchewan.

Most of the major world players in the potash market have operating mines in Saskatchewan, and the province also has many junior exploration companies searching for the next great potash deposit. Companies with potash interests in Saskatchewan include:

Potash Corporation of Saskatchewan (NYSE:POT)

The Mosaic Company (NYSE:MOS)

Agrium Inc. (NYSE:AGU)

BHP Billiton (NYSE:BHP)

Encanto Potash Corp. (TSXV:EPO)

K&S Ag (ETR:SDF)

Western Potash (TSX:WPX)

Karnalyte Resources (TSX:KRN)