MELBOURNE, Sept 2 (Reuters) - An Australian-listed explorer is hoping to start producing potash from a mine in Congo Republic by 2021, it said on Friday, after having lined up funding from three new shareholders, including leading Chilean fertiliser producer SQM.
The push comes despite potash prices having sunk to their lowest in a decade due to a supply glut, which has led two North American agricultural giants, Canada's Potash Corp and Agrium, to enter merger talks to help them grow.
The weak market has also led global miner BHP Billiton to slow down work on a huge potash mine in Canada, the $10 billion-plus Jansen project, which it has long seen as a major long-term source of growth.
However junior firm Elemental Minerals Ltd sees an opportunity to build one of the world's lowest cost potash mines for less than $1.8 billion, with the support of SQM, as well as Oman's biggest sovereign wealth fund and Africa-focused Summit Private Equity.
The big attraction of Elemental's three prospects in Congo is that they are large, very high grade, and shallow, at 200 to 300 metres deep compared to the more typical 1 kilometre depth like BHP's Jansen, Managing Director Sean Bennett said.
"Having looked at various potash projects around the world this was, in our view, one of the best candidates to become a low-cost project," SQM Chief Executive Patricio de Solminihac said in a statement.
The material is also easy to process and close to a port, which, all together, would make Elemental's Kola project one of the lowest cost potash operations in the world.
"That means whatever happens to the potash price, we are better off than anyone else in the market," Elemental's Bennett said on a conference call.
The company, which plans to rename itself Kore Potash, has already won a mining license and lined up a construction team, including French firm Technip, and has secured commitment from its new investors to take 40 percent of the 2 million tonnes a year initial output from the mine.
"The intention would be to start production by 2021," Bennett said. Elemental sees Brazil and Africa as the big potential markets for its potash.
Elemental's shares jumped 19 percent to an eight-month high on Friday. (Reporting by Sonali Paul; Editing by Himani Sarkar)