Canadian fertiliser products company Karnalyte Resources has received a strategic review report from MNP, which concluded that the junior must find a “major industry partner” to develop the Wynyard potash project.

In its feedback on the strategic review report, the Karnalyte board indicated that attracting another strategic partner with a strong presence in the industry could help overcome unfavourable market conditions, including low prices and low interest levels from financial institutions.

The board stated that market sounding activities to date had indicated industry partner interest, although the interest was limited in terms of the number of players.

“It is indicative that there is additional potential with an aggressive and well-structured marketing effort,” Karnalyte said.

The Wynyard project entails Phase 1 production of 625 000 t/y of high-grade granular potash, and two subsequent phases of 750 000 t/y each, taking total production up to 2.125-million tons a year.

Karnalyte has an agreement with its Indian strategic partner, Gujarat State Fertilizers and Chemicals (GSFC), for about 56% offtake over 20 years in the expected production in Phase 1 of the project.

Besides an offtake agreement, other positives counting in Wynyard’s favour is that the mine would not produce tailings piles or ponds and that it would require limited use of fresh water, resulting in minimal surface impact.

Karnalyte also pointed out that the oversupply in the potash market that had created an ongoing structural problem appeared to be easing and that recent developments could signal a shift in upward pressure on prices.

Production will be curtailed as Mosaic has closed two of its shafts early and sanctions may be imposed on potash exports from Belarus.

Regarding the nitrogen project that Karnalyte owns, the strategic review found that the project was a high risk without both an offtake agreement and a joint or independent capital investment.

GSFC has indicated that, if requested by the company, it would support the nitrogen project but only as technical adviser at the planning phase, design phase, and construction phase, and as initial operator of the facility, to bring GSFC's experience operating nitrogen fertiliser production facilities to the project. However, GSFC has emphasized that Karnalyte would require a strategic partner to support the project, as GSFC was not in a position to act as lead partner.

The nitrogen project is a proposed small-scale nitrogen fertiliser plant with a nameplate production capacity of about 700 t/d a day of ammonia and about 1 200 t/d of urea.