Big Utah potash project collapses for lack of investors

(Courtesy photo by Peak Minerals) The Bureau of Land Management approved a 125,000-acre complex of evaporation ponds on Utah's dry Sevier lake bed as part of a project to produce up to 370,000 tons of potash a year. The project has now collapsed for lack of investors despite a $100 million-plus tax credit offered by the state of Utah.

A few years ago, Crystal Peak Minerals boasted of plans to become a top producer of potash, a valuable mineral used in fertilizers, once it got its operation running on the bed of Utah’s Sevier Lake.

Yet after successfully securing the permits and incentives it needed to commence construction last year, the Canadian-owned firm is walking away from the project after failing to raise sufficient capital, according to company news releases. Not even a promised tax credit worth up $112 million from the state of Utah could entice enough investors.

In a corporate restructuring announcement earlier this month, the Salt Lake City-based Crystal Peak reported it was handing the project to its key creditor, Australia-based private-equity manager EMR Capital Investments. Crystal Peak said it is moving on to pursue new projects targeting gold and base metals.

With great fanfare last year, the Trump administration’s Interior Department announced it was approving Crystal Peak’s plans for a network of canals and evaporation ponds on the 124,000 acres comprising the mostly dry Sevier lakebed in Millard County.

Interior Secretary David Bernhardt dispatched a top deputy to Salt Lake City to preside over the decision signing after the Bureau of Land Management concluded an environmental analysis in August 2019.

At the time, Rep. Chris Stewart lauded the project, calling it “great news” for the state by creating many “family-supporting jobs.”

“It’s also exciting to see more potash being produced domestically, especially in Millard County,” the Utah Republican said. “I am pleased to have Crystal Peak Minerals operating in my district.”

The company appears to have not yet communicated its latest intentions to the the BLM, which oversees most of the lakebed.

“The BLM is waiting to hear from Crystal Peak Minerals before working on the notice to proceed, which would allow Crystal Peak Minerals to begin work on the playa,” spokeswoman Hannah Lenkowski said Friday. “The BLM will also install compliance inspectors when Crystal Peak Minerals is ready to begin work.”

While the potash-mining jobs are not likely to materialize for Millard County, environmental activists were relieved the Sevier Playa will remain intact for now.

“This is good news for Utah’s West Desert in terms of groundwater flows in places like Fish Springs National Wildlife Refuge — an impact BLM acknowledged but didn’t analyze," Steve Bloch, legal director for the Southern Utah Wilderness Alliance, wrote in an email. The refuge is a resting place for waterfowl traveling the Pacific Flyway.

Bloch also praised the preservation of dark night skies.

Crystal Peak previously had qualified for a generous tax credit the Utah Legislature tailor-made for the project in 2015. SB216 provided the credit to such projects to cover up to half of what they invest in utility infrastructure.

The company also secured various permits and water rights but couldn’t attract the needed investments, prompting CEO John Mansanti to resign in August “to pursue other business interests,” according to a news release. After Crystal Peak’s cushion of cash reserves fell below a minimum threshold, EMR foreclosed on its investment. On Oct. 17, it is to assume ownership of the project.

EMR officials could not be reached for comment.

Woods Silleroy, Crystal Peak’s corporate secretary and designated public contact, did not respond to an email.

Under the project proposal, the Sevier Playa would have produced the more valuable sulfate of potash, used to fertilize high-value nut and fruit crops, which are sensitive to the chlorine in other, cheaper forms of potash.

Over the 30-year life of the project, production could be as high as 372,000 tons a year, worth $232 million at last year’s spot prices, which have declined in recent months. The mine also expected to extract salt and magnesium chloride.

The plan was to drill up to 2,264 wells and cut up to 306 miles of trenches into the lakebed to collect brines that would be moved through a system of ponds, covering up to 18,000 acres, according to the project’s environmental impact statement. As the water evaporated, the brines would get more concentrated.

Recent news releases suggest the pandemic thwarted the company’s fundraising efforts, but Crystal Peak had its permits in hand months before the coronavirus blew a hole in the global economy.

Traded on the Toronto Stock Exchange, Crystal Peak’s stock prices this year took a nosedive, now trading for about a penny per share.