The Southey Project is a proposed potash solution mine designed with a capacity of 2.8 million tonnes per year that would be similar to Saskatchewan’s other solution potash mines. The proponent of this project is Yancoal Canada Resources Co. Ltd. The project was named after the town adjacent to the original drillings area.
Yancoal Canada Resource Co. Ltd. (Yancoal Canada) is a wholly owned subsidiary of Yanzhou Coal Mining Co. Ltd. The parent company is a diverse energy enterprise with over 40 years of mining experience and over 107,000 employees worldwide. Yanzhou Coal Canada is a publicly listed company in the New York, Hong Kong, Shanghai, and Sydney stock exchanges. Yancoal Canada was established in 2011 and is based in Saskatoon, Saskatchewan. Their vision is to mirror the success of Yancoal Australia, with 10 operating mines and a localized workforce. Of the 3000 jobs provided by Yancoal Australia in 2015, only 8 came from the headquarters in China.
The Southey Project would be located approximately 60 kilometers north of Regina within the Rural Municipalities of Longlaketon (RM 219) and Cupar (RM 218). The site will be west of Highway #6 and north of grid road #731 (also known as the Strasbourg Grid). The community of Earl Grey is approximately 21 kilometres southwest of the project, the community of Strasbourg 23 kilometers northwest, and the community of Southey 28 kilometers southeast.
Will the economic benefits to Saskatchewan and Canada through taxes and royalties be the same for the Southey Mine as we have seen with the other potash mines in the province?
Yes, the tax and royalty regimes applied to the other potash mines in the province will be applied to the Southey Mine, and the Southey Mine will be operated in accordance with local industry practices. Revenues collected from the mine will include Municipal Taxes, Crown Royalties, Potash Production Taxes, the Saskatchewan Resource Surcharge and Corporate Income taxes paid to both the Provincial and Federal Government. It is important to know that the Municipal Tax to be paid annually by the project is independent of the profitability of the mine, but rather reflects the property value assessment of the mine. Royalties and Taxes collected from the Southey mine will be consistent with the treatment of other potash mines in the province.
There are 9 occupied residences within a 1 mile radius of the mine site area, 19 occupied residences (inclusive of 1 mile) within a 2 mile radius of the mine site area, and 1 occupied residence within the well field cluster.
What is the anticipated project schedule?
The environmental assessment review process was completed in August 2016 and the final approval from the parent company is anticipated to be in first quater of 2016. The next phase of the project is the Licensing and Permitting Phase - this phase is prior to the Construction Phase and could take 3 to 6 months to complete. Currently, construction is anticipated to begin in the third quarter of 2017 and production starting in early 2021.
No, Yancoal Canada will not be shipping their potash directly to China. Yancoal Canada is a publicly traded company and will be responsible to shareholders. These investors will expect the project to be profitable and competitive with other local potash operations. As well, the vision for the Southey Project is to achieve a sustainable, localized development. This means it will be built on local industry practices, including how and to whom the product is sold. It is still too early in the project development to make a decision, but Yancoal Canada will consider being a part of Canpotex in the future.
In order for the project to be sustainable it has to be profitable. Yancoal Canada has hired a third party consultant to tell us where we will likely find clients for our potash; the top five markets are Brazil, India, South East Asia, the United States, and China. China only imports 10 to 15% of its potash from Canada. China gets most of its potash from Russia and the Middle East, as the potash can be easily shipped by train. The potash quality from Russian and the Middle East may be lower compared to Canadian Potash, but the transportation costs of crossing the Pacific Ocean makes Canadian Potash less economical. Therefore, we do not see China importing significantly more potash from Canada in the future.
A decision on whether Yancoal Canada will market potash privately or through CANPOTEX is expected to be made later in the project development. Yancoal Canada recognizes that CANPOTEX is a world leading potash exporter and anticipates a discussion with them in the future.
Late in 2016 it is anticipated that an options study will be completed to look at the road access option routes proposed by the local communities. Currently, road access to the site is anticipated to be provided via Highway #6, grid road 731, and a small section of new road connecting grid road 731 to the site location. The access route will need to be upgraded and maintained to ensure it is adequate for the volume and types of traffic that will be reporting to the site. Road closures will also be necessary for roadways that currently transect the core facility, and alternative access routes will be identified and built to accommodate the diverted traffic around the site. These road closures and new traffic routes will be identified and designed in cooperation with the host rural municipality and local landowners. All municipal roads will be built to municipal standards.
Yancoal Canada will pay for developing and/or upgrading the primary access road to the site, as well as additional road alterations or upgrades required for the project. Yancoal Canada will be developing a road maintenance plan.
Yancoal Canada will work with the provincial government (Ministry of Highways and Infrastructure), surrounding municipalities, and local landowners to ensure an equal or improved quality of service, including safety. This will be accomplished through the identification of mitigation measures, such as improved design criteria or maintenance frequency, reduced speed zones and proper signage. A traffic management plan will be derived with input from the Southey Project Working Group and the Inter-Municipal Advisory Committee.
Site-specific occupational health and safety plans, and environmental management plans will be developed for the Southey Project to meet regulatory requirements using the results of the environmental assessment, the risks identified in the planning stages, and input received from the Southey Project Working Group and the Inter-Municipal Advisory Committee. This will include having an emergency response plan in place and a team who is trained to respond to security issues, accidents and other incidents that may occur during construction and operations. The construction camp will be included in these plans.
The construction workforce will be managed by an Engineering, Procurement, and Construction Management team and employees will be expected to follow an employee code of conduct. Yancoal Canada anticipates that part of the management of the site will include a contractor vehicle license database and cause for termination criteria that will include the conduct of employees in the communities.
Yancoal Canada recognizes that aggregate sourcing is an issue of concern for local municipalities. Yancoal Canada will finalize an option study for an aggregate source in the next phase of the project, and source as much aggregate as possible from local sources without adversely affecting existing users.
Yancoal Canada is currently exercising the option agreements which were in place with local landowners early on and once finalized, Yancoal will become the landowner of approximately 8.5 sections of land. These will provide the land that is required for the core facility, as well as for the first 10-year well field.
Currently, The Saskatchewan Farm Security Act limits Non-Canadian-Owned Entities to 10 acres. Similar to other non-Canadian companies (both potash and non-potash) that work in the Province, Yancoal Canada applied for and received an exemption order from the Farm Land Security Board that provides the opportunity to purchase up to 60,000 acres. However, Yancoal Canada only intends to purchase what is necessary for the project. At this time approximately 4,800 acres (33 quarters) of land has been secured.
Yancoal Canada has no further land acquisition requirements at this time. Yancoal Canada will re-evaluate their land requirements after a favourable Financial Investment Decision has been communicated by the Yancoal Board (expected March 2017).
The initial mining wellfield would encompass approximately 3 sections of land. Approximately 52 well pads would be required for the 65-year mine field, disturbing an additional section of land.
The well pads to be established in the well field would be at most 200 metres by 200 meters or 0.04 square kilometres or 9.88 acres. If 1 section of land is 2.6 square kilometers then the area to be disturbed by the well pad would be 1.5%. It is estimated that at least 90 percent of the well field area would be available for farming.
During normal operations at full production, the maximum average water volume required will be 1,450 cubic meters per hour, during initial development the volume is anticipated to be 1,602 cubic meters per hour. On average an irrigation farm in Saskatchewan uses 67 cubic meters per hours; therefore, the Southey Project would be like adding 22 irrigation farms to the system. The system has been assessed by the Water Security Agency and was determined to have the capacity to handle at least 112 additional irrigation farms without affecting water availability.
Water consumption will be limited to the extent possible. As much water as possible will be reused. Depending on the specific stage and the process underway, it is estimate that between 20% and 50% of the water will be reused.
Yancoal Canada applied to the Water Security Agency (WSA) for a water license for the required water volumes. Preliminary assurance from the WSA has been receive indicating that the water allocation requested is available and can be supplied from the Buffalo Pound Lake Reservoir without affecting other end users. The WSA has completed an independent evaluation of the system to determine its ability to accommodate a regional water supply for new industrial users while continuing to reliably supply downstream users both current and those predicted in the future. The WSA is confident that industrial water demands can be met without exceeding the desired operating range of the lake. One factor contributing to this conclusion is that Buffalo Pound Lake is supplemented by the flows from Lake Diefenbaker, which makes it a more sustainable source of water.
Information about long term watershed planning can be found on the Water Security Agencies website (https://www.wsask.ca/), and information regarding the environmental impact assessment completed from the regional water supply expansion can be found on the Ministry of Environment’s website (http://www.environment.gov.sk.ca/2013-002EISExecutiveSummary).
Under the Water Security Agency Act, the Water Security Agency has the ability to cancel, amend, or suspend any industrialized user’s (such as Yancoal Canada) license due to a provincial water shortage or pressing necessity. If there is no water supply to the project then the mining operation would be reduced based on the water availability or shut down. Human use (residences and farms) would take priority over industrial use.
Water consumption will be limited to the extent possible. As much water as possible will be reused. Depending on the specific stage and the process underway, it is estimated that between 20% and 50% of the water will be reused.
If the project is developed there will be changes to the immediate environment; however, Yancoal Canada will be required to meet provincial regulations and best practices in regards to health, safety, and the environment. The province has been a leading potash producer for over 60 years, which means the regulations governing potash developments are stringent, well-established and proven.
If Yancoal Canada cannot demonstrate that they have the ability to meet the provincial requirements a license to construct and/or operate will not be issued by the government.
The environmental assessment review process aims to determine if the project can be safely constructed, operated and decommissioned. The prediction made in the Environmental Impact Statement (EIS), which details the environmental assessment, are based on the proposed mitigation and environmental design features that will be incorporated into the project’s engineering design. The effectiveness of these measures are well defined based on information from the numerous operating mines in Saskatchewan. Current scientific knowledge is then used to assess the potential effects the project could have on the environment. If unacceptable effects are predicted the project design is changed and the project is reassessed until the company is confident the project can be safely build, operated and decommissioned.
To ensure predictions were not underestimated monitoring is conducted. If the monitoring data shows a potential for an effect higher than predicted, adaptive management will be implemented to stop the change before it is a problem.
No water will be released from the site, unless a sewage lagoon is developed as part of the project.
Solution potash mining produces waste salt (sodium chloride or NaCl) as a by-product. This waste salt is to be stored on surface. Solution mining produces less waste salt compared to conventional mining, because most of the insoluble material is left underground rather than being brought to surface. This waste salt will be stored in a containment area referred to as the Tailing Management Area (TMA). This area will be engineered to prevent contamination of the surrounding environment.
Water from the surrounding environment that would flow into the site will be diverted around the site downstream into the natural drainage. This minimizes the amount of water that could become contaminated and would need to be managed onsite. The water onsite (surface water and groundwater), as it could have come into contact with the waste salt will be controlled and contained to the site. This potentially contaminated water will be sent to the brine reclaim pond and ultimately disposed of by deep well injection. Injection of brine into the deep sub-surface is a well-established disposal strategy in Saskatchewan, and is currently in use at all of the existing potash mines.
The project will be required to meet strict air quality regulations, which will require the project to use several different dust control measures. The project will result in an increase in particulate matter (i.e., dust), carbon dioxide, carbon monoxide, nitrous oxide, methane, sulphur dioxide, nitrogen dioxide, and potash (i.e., potassium chloride). However, predicted concentrations of all of these emissions will be below their respective ambient air quality standards.
The waste salt will be stored on an area with natural containment; in other words it will be placed on top of an area that is lined with clay (relatively impermeable to water material). Containment berms and dykes will be constructed around the tailings management area to contain salt and decanted brine, as well as divert surface water away from the site. Additional containment infrastructure options include a cut-off wall, which would be made of material that is relatively impermeable to water. This wall would extend down into the ground and surround the containment area, essentially cutting off the management area from the rest of the site and surrounding environment. Recovery wells can also be used to control groundwater flow under the site, the water under the management area would be diverted to the surface and would end up in the brine reclaim pond.
Environmental design features will be incorporated into the process plant to reduce dust and greenhouse gas emissions. For example, dust-producing equipment (e.g., conveyor belts) will be enclosed within buildings, buildings with sources of dust will have controls to recover dust (e.g., dust cyclones, baghouses, and wet scrubbers), and dustless chutes will be used for product loading. Roads used for the project will be upgraded and paved to reduce dust. The waste salt is placed in the Tailing Management Area through a slurry pipeline where a crust forms over the outer layer of the salt pile as the slurry dries. This crust inhibits the production of fugitive dust due to wind erosion.
Ground subsidence is present at all existing potash mines in Saskatchewan and will occur from the development of the well field caverns in the Southey Project well field. The subsidence will occur at a gradual slope (maximum 5 millimeters over 1 metre or 0.2 inches over 3.3 feet) over a large area 1.7 kilometers, and will occur at a slow rate (over a century). The slow rate is important because it will give the vegetation time to adapt, preventing disturbed soils and soil erosion. The gradual change will mean that distinct breaks in the horizon containing groundwater resources will not happen (the aquifer integrity won’t be affected), and sinkholes and other disruptive subsidence will also not occur. Subsidence will be limited by the depth of the caverns (over 1 km below the ground), the vertical extent of the caverns (75 m cavern radius), the low extraction ratio (80 m pillar of unmined material left between caverns), and the favorable overlying rock layers.
The wells drilled to establish the caverns will be cased down to the top of the potash formation (over 1 kilometer below the surface) to prevent interaction between the drilling fluid or brine and the surrounding environment. When the well is drilled though the subsurface containing groundwater resources the casing will be surrounded by cement to further prevent leaks from happening. Well casing is a common practice for wells drilled in Saskatchewan and is reported to the Ministry of Economy; all potash mines whether conventional or solution are drilling wells, including those over the Hatfield aquifer. After use the wells will be abandoned in accordance with provincial regulations to prevent contamination.