With the curtailment of its marine diamond mining joint venture with Diamond Fields International offshore Namibia, Bonaparte Diamond Mines [ASX:BON] is shifting its resources to developing prospective marine phosphate deposits in the area.
Rapidly rising food prices and supply shocks have triggered riots in a growing number of nations, which in turn has led to rising demand for fertiliser and the phosphate mineral feedstock that is used to produce it.
Bonaparte is now extending marine exploration, mining skills and resources to exploit marine phosphate deposits on Namibia’s coastal shelf off the port of Walvis Bay.
Planning is at an advanced stage for systematic sampling of phosphatic seabed sediments in the 1,000 square kilometres Meob Project area (EPL 3323) for commencement mid 2008, management reported in a May 26 Australian Stock Exchange release.
A scoping study is expected by the end of 2008.
Promising Prospects for Phosphates
Sharp increases in fuel and other supply costs have prompted Bonaparte and Diamond Fields International to curtail their marine diamond mining operations despite record sale prices and recent vessel operating improvements achieved by the marine team, according to management.
Remaining resources in the joint operations area will be available for future mining should the economics warrant.
Trends in the market for phosphate used in fertiliser production are more promising, however. Originally discovered and delineated in the 1970s, but undeveloped, Bonaparte is planning to produce 40-50 million tonnes of unconsolidated phosphate sediment with a grade of 10%-15% P2O5 with the potential for onshore beneficiation to yield 3 million tonnes of commercial, 35% grade P2O5 per year.
We are in a strong position to develop a very significant marine phosphate resource from which we establish a position as a global player in the world phosphate market. The Namibian licence areas are well situated for access to existing port facilities at Walvis Bay and thereby for prime access to fertiliser markets along the Atlantic seaboard, particularly in Brazil as well as in Africa, managing director Michael Woodborne stated in the release.
Phosphates and Fertiliser
Essential for photosynthesis in plants and for other living organisms to manufacture parts such as bones and teeth, phosphorous is one of the three principal components - along with nitrogen and potassium - required in the production of fertilisers, according to background information in a May 28 Bonaparte filing with the ASX.
Guano deposits and rock phosphate originally formed in marine environments are the two main sources of phosphorous used in fertiliser production. Besides the marine deposits Bonaparte is working to develop, Ma’aden, Saudi Arabia’s national mining company, is investing some $3.4 billion to fully develop what it expects to be the world’s largest source of diammonium phosphate, the Al Jalamid phosphate deposit at Ras az Zawr in its Eastern province, for example.
Rock phosphate prices have increased from $50/tonne FOB (free on board) in early 2007 to $350-$400/tonne FOB in early 2008 (UBS Investment Research, April 2008), Bonaparte management noted. Exports of phosphate fertiliser products from China, which currently account for more than 20% of global granular fertiliser, are expected to cease. Eighty percent of global rock phosphate supply comes from five producers, resulting in a highly restricted supply of raw materials.
Namibian Marine Deposits
The marine phosphate deposit Bonaparte is working occurs as nodules of fine-grain sized sand particles at depths ranging between 150-300 metres seawater.
Bonaparte’s initial exploration target‡ in the Meob project area is to define 40 to 50 million tonnes at an average grade between 10% and 15% P2O5 prior to enrichment. This target is consistent with published historic sampling and provides for considerable exploration upside both within Meob project and in the additional 9,000 square kilometres of tenements under application.
The initial phase of sampling in Bonaparte’s Meob license area yielded results in line with historical results. Estimates of grade demonstrated potential for enrichment from in situ grades of 18% to commercial grades up to 35% phosphate (P2O5) via simple screening and removal of shell and volatiles in the fine fraction (<1mm).
We’ve known about the potential for marine phosphates off the coast of Namibia for a while. Developing these has come about as a natural extension of our marine investigations into the exploration of mining of diamonds and it’s been a great development that the price has changed making the commodity a viable consideration for the company....
The company is applying to the Namibian Ministry of Mines and Energy for an additional nine licenses covering a 9,000 square kilometre area.
The exploration and any subsequent development will be undertaken and the responsibility of Bonaparte’s Namibian joint venture, in which Bonaparte holds a 70% share and Tungeni Investments - a government-owned private company - the remaining 30%.
These particular areas are going to be approximately 40 kilometres off the coast in an environment where operations have been ongoing in the marine diamonds industry for many years now so the operational environments are very well understood, Woodborne said in an interview with Sydney’s Boardroom Audio.
Management is formulating a development plan that includes using conventional suction dredging and simple onshore beneficiation with the aim of producing 3 million tonnes per annum of rock phosphate at low operating cost.
The deposits’ relatively shallow depth is well within reach of existing dredging ships is one of several attributes that can give Bonaparte and the Namibian government a cost advantage over competing projects, according to Bonaparte.
The unconsolidated nature of the marine phosphate deposits affords the operation a competitive advantage over hard rock phosphate mining on land, as it requires less in the way of processing for enrichment, management points out. Also contributing to the potential for a low cost base is close, built-in access to Walvis Bay’s existing port infrastructure.
Moreover, the growing practice of directly applying rock phosphate in organic agriculture, as opposed to enhanced fertiliser products, lowers costs to farmers and requires less in the way of environmental management.
Dredging the seafloor has triggered environmental protests and stymied project development plans in Bonaparte’s home base of Australia. Woodborne and Bonaparte believe that the environmental impacts of developing the prospects in Namibia will be relatively minor, and that Namibia’s existing environmental laws and regulations provide assurances that offshore mining activities will be conducted using the latest technology and best practices.
Namibia must be one of the few countries in the world that has established a marine diamond mining industry, or offshore diamond mining industry, Woodborne told Boardroom Audio. They’ve got well-placed legislation, management programs accepted to establish baselines, etc.
Certainly there will be minor impacts; it all comes down to what percentage of that environment we’re going to be influencing and in those vast areas off the coast we are likely to be influencing only a very small percentage of the ground or point of a percentage of that ground and we’ll do so in terms of established mining practices with the Namibian government.
Woodborne added that standard practice in the marine mining industry is to redeposit a large portion of mined material on the seabed almost immediately.
After that it’s a case of putting the tailings directly over the ground that’s been mined so it’s almost an immediate replacement of a large portion of the material. After that it’s allowing the ocean to do its normal work of regenerating itself and reestablishing itself.