The Carlsbad ‘measuring stick’ is following IC Potash
You could just about run word-for-word this first paragraph from a report in The Wall Street Journal in 1950: “Potash prosperity has come to Carlsbad”. Except that, since 1950, it never really went away, and these days the newspaper excited by this potash story is New Mexico’s local Carlsbad Current-Argus.
Last week IC Potash Corp (TSX:ICP) president and chief executive Sidney Himmel unveiled his company’s independent feasibility study for its 100%-owned Ochoa sulphate-of-potash project, 95km east of Carlsbad. (The full announcement is published here on Investor Intel under the Potash and Phosphate news feed.) The key fact is that the study projected a viable mining and processing development to produce 714,400 tonnes a year of SOP for a minimum 50 years.
Zack Ponce, energy and land reporter at the Current-Argus, was immediately calculating the new mine would generate around 400 jobs. He noted that “IC Potash projects its product mix to consist of 229,400 tons of standard sulphate of potash, 385,000 tons of granular sulphate of potash, and 100,000 tons of soluble sulphate of potash, which will position IC Potash to ‘become a world leader in (sulphate) production,’ according to Himmel”.
Carlsbad is very sensitive about the state of the potash industry, given that Intrepid Potash and The Mosaic Company are producers in neighbouring Eddy and Lea counties. Recently Ponce wrote that “Carlsbad is as good a measuring stick as any when it comes to gauging the overall health of the potash”, a point he made in reference to Intrepid laying off 7% of its New Mexico workforce as a response to lower potash prices.
As the Current-Argus told its readers, “IC Potash has leased around 400,000 square miles of land for the Ochoa Project, of which about 30,000 acres of subsurface mineral rights have been leased from the New Mexico State Land Office. The plant is designed to operate 7,912 hours annually with a permanent workforce of about 400 full-time employees, and the company estimates there are enough polyhalite reserves underground to last for 50 years of continuous mining. The state of New Mexico estimates it could receive about $8 million from IC Potash annually once full production is reached, according to Greg Blume, the assistant commissioner for oil, gas and minerals in the State Land Office“.
There’s a lot of history around Carlsbad and potash. And its fortunes have reflected those of the industry. The first commercial production of potash in New Mexico began in 1931 and has remained a mainstay in Eddy and Lea counties for over 80 years. Ponce, in another report, interviewed 82-year-old Jim Walls who moved to Carlsbad in 1950 and went through the boom years and two downturns, one involving the threatened 1986 close-down of Amax Chemical Corp.
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One of those booms was in 1950. As the WSJ reported at the time, the population had tripled to 25,000 and its two banks had deposits totalling eight times more than a decade earlier. The paper named the then Daily Current-Argus and “Adair Gossett’s jewelry store over on Canyon Street” as two business booming as a result of the potash. Carlsbad was the source then of 85% of potash produced in the U.S.,the rest coming mainly from California and Utah. (According to the U.S. Census of 1850, potash production was America’s most thriving chemical industry and, at that time, 569 plants were producing potash from wood ashes).
But then came the less than good years. In 2009, the Albuquerque Journal reprinted a Current-Argus report on the demolition of the U.S. Potash Co mine, the one that had put Carlsbad on the map. The company had been formed in 1926 after drilling the previous year had hit the large potash deposits. “During the heyday of the potash industry, Carlsbad and Eddy County were home to seven mines,” it was noted.
By the late 1940s, other companies were targeting the area around Carlsbad. The WSJ article noted that the Duval, Sulphur & Potash Co of Houston, which started prospecting in 1947, has just sunk a mining shaft and was planning to produce 150,000 tons a year. American Metal Co and Freeport Sulphur Co were also drilling for potash around Carlsbad.
No wonder the Current-Argus is following the IC Potash story.
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