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Western Potash Corp. renegotiates water supply agreement

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World Fertilizer,

Western Resources Corp. has announced that its wholly owned subsidiary, Western Potash Corp., and the City of Regina have agreed to the revised key commercial terms for the supply of treated wastewater from the city to the company’s proposed Milestone Potash Project.

The project is located 35 km southeast of Regina, Saskatchewan, Canada. Regina’s city council voted in favour of the agreement at its meeting on 31 October 2017. Both parties are now currently finalising the agreement.

In November 2012, the city and Western Potash Corp. entered into an agreement enabling the city to provide the company with access to recycled wastewater for a 2.8 million tpy conventional potash solution mine. In response to the potash market, the company adjusted the development plan and rescoped the project to utilise the innovative ‘horizontal drilling + selective solution mining’ techniques that will provide a significantly reduced UNIT CAPEX and competitive OPEX. In order to secure the most favourable data, Western will use this technology to develop a Phase 1 project with a capacity of 146 000 tpy. Once the technique has been tested, Western Potash Corp. will develop the previous 2.8 million capacity project in two phases, each at a 1.4 million tpy potash production. The Phase 1 project will utilise groundwater from the mine site, whilst Phase 2 and 3 projects will utilise treated water from the city. The selective solution mining technology uses significantly less water compared to conventional solution mining techniques, and the renegotiated agreement therefore decreases the volume of water correspondingly.

Over the space of six months, negotiating teams have developed a mutually beneficial agreement that extends the rights to access 25 000 m3/d of treated wastewater until 2025, as well as an additional 40 years access once the wastewater is drawn.

Under the terms of the new agreement, Western has agreed to pay a commitment fee of $200 000 when the final agreement is signed, and an annual standby fee of $100 000 for each year that water is not drawn. Once the company starts to draw water, 50% of the standby and commitment fees paid to the city will be refunded in the form of a credit against water usage charges.

This agreement presents the City with an economic opportunity for revenue during the 40-year life of the agreement and standby fees if the project does not proceed by 2025. In addition to this, the re-use of wastewater is beneficial in both the reduction of fresh water, and in the elimination of wastewater from local rivers and creeks. It will also mean that the Milestone Potash Mine will essentially not use any fresh water (with the exception of minor potable and process requirements). It is worth mentioning that this new technology – in addition to the reduction of water consumption – is also environmentally friendly, with no more salt tailings above ground, energy usage significantly reduced and minor subsidence.

The Chairman of Western Potash, Bill Xue, said: “We are very pleased with the terms of the new agreement with the city of Regina and appreciate all the hard work that went into the negotiations. This agreement benefits all parties involved and has substantial environmental benefits. We are continuing with the development of the Milestone Phase I project through the innovative technology and will actively advance the 2.8 million t full scale project. We look forward to a long-term relationship with the City.”

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