Rio revisits Saskatchewan’s potash scene

Rio Tinto (RIO-N) is investing back into potash, after selling its potash interests in Canada and Argentina to Vale (VALE-N) for US$850 million in 2009 to help pay off its debt during the 2008-09 recession.

The major is now revisiting Saskatchewan’s potash scene by signing a joint-venture agreement with North Atlantic Potash, the Canadian subsidiary of Acron, a large Russian fertilizer producer.  

The current agreement is for nine of North Atlantic’s potash permit holdings, covering 2,410 sq. km in the southern part of Saskatchewan’s highly-prospective potash district.

Under the joint venture, Rio Tinto holds 40% of the permits and North Atlantic owns the rest, says North Atlantic’s CEO David Waugh, adding Rio Tinto is responsible for funding and running an extensive exploration program.

The joint-venture drilling program could start as early as November. When completed, Rio Tinto will have an option of stepping up its 40% interest to 60%, and could ultimately increase that to 80% if it chooses to make more payments.

Waugh says the agreement doesn’t allow him to disclose financial details. But, he notes the company was in discussions with Rio for three to four months before signing on and is more than pleased with the partnership.

“It’s a great partnership because they bring a lot of experience, in one an exploration program of that size, and two in solution mining of potash because this area is a deep zone of potash that would be conducive to solution mining, not conventional mining. So their partnership was key to us to get the most value out of those resources.”

Though it’s still early days, Arie Zuckerman, North Atlantic’s CEO, believes the area has great potential.

 “We strongly believe that together with the professional experience and financial capabilities Rio Tinto brings into this project, we will be able to be the next producing mine in Canada,” said Zuckerman in a press release.

The joint-venture area extends from the eastern shore of Last Mountain Lake southwest to Broadview, and butts up against Vale’s potash leases, which were once held by Rio.

In total, North Atlantic Potash holds about 11, 000 sq. km and 26 exploration permits in the Saskatchewan potash belt.