Trade off study of possible options
This study examines the different options possible for the development of the project with a view to eliminating evidently unrealistic options.
Geological and mineable resource
One must start from the resource available. There is a minable resource of phosphate rock that is measured as 160 Million tonnes (Mt) at an average grade of 14.2% P2O5 (cut-off grade 10% P2O5), distributed in three valleys North, East and South (link). Although the resource estimates are not deemed of the highest standard for "Public Reporting of minerals Exploration Results, Mineral Resources and Ore Reserves" (JORC code: Joint Ore Reserves Committee), the resouce is judged sufficiently reliable by the professional consultants who have viewed and worked on the data lately, namely SRK of the US and South Africa.
However, the fact that the ore reserve is considered not complying to modern norms of geological resource measuring, has to be taken into account. A small amount of additional drilling is required for this, to decrease the distance between some of the holes. This will increase the confidence in the reserve estimates, but I do not think it will alter the proven nor indicated reserves, nor quantities measured by cut-off grades and the 160Mt estimate. The orebody is of eruptive nature affected by weathering erosion which varies locally. This is the controlling factor that affects reserves.
The 160Mt reserve is shown here as a block model (link). the blue blocks are the lower than 10% P2O5.
Ore beneficiation
The technical and economic feasibility of the project crucially depend on ore beneficiation and recovering 21% of P2O5 concentrates instead of the 7.4% that were achieved historically and factually in the days of TICAF. This will ensure that the 160Mt ore reserve can be mined at sufficient scale and in a timeframe to support large capital investment. The assumption of a 21% recovery is based on laboratory bench tests done by the Indian Institute of Mining and metallurgy IMMT at Bubaneshwar. This important improvement is due to the recovery of P2O5 from the very fine fractions of the ore ie. less than 45 microns that were lost to tailings in TICAF's daays.
To become factual, additional work has to be done, namely
1: to validate the process in a small continuous pilot test plant of the order of 150-200 kg/hour throughput; and
2: to confirm the process in a semi industrial stage so as to minimize risks associated with a capital intensive project. For reasons that are explained later in this note, this is the object of phase1 of the development of the project.
Additional studies are required in particular to ascertain the possibility of dewatering the concentrates, the sludges sent to tailings, their disposal after dewatering and the recycling filtered water in the plant (link) including pressure filters (link).
Agronomics
The resource in ground is of no economically agronomic value because the P2O5 content is insoluble in water or it would take years and years to be dissolved for the benefit of plants. The resource must therefore be transformed to become useful for agronomic utility and value.
A great deal of information is available on Sukulu phosphate rock which was mined and transformed in the nineteen sixties and seventies.
Ore was mined at Sukulu between 1962 and 1978; it consisted of residual soil, the weathering products of Sukulu carbonatites, with an average grade of 12.8% P2O5. Tororo Industrial Chemicals and Fertilizer Ltd (TICAF) started by mining the residual soils of the North Valley, which contain approximately 32% apatite, 57% magnetite and goethite, as well as 0.25% pyrochlore. The apatite from the Sukulu soils was won through grinding and magnetic separation, followed by flotation. The apatite concentrate (40-42% P2O5) was acidulated with sulphuric acid and transformed into single superphosphate (SSP) grading 18% P2O5 water soluble. In total, TICAF produced approximately 160,000 tonnes of apatite concentrate (40-42% P2O5) from 2.16 million tonnes of ore (recovery was 7.4%). In 1969, TICAF produced 13,800 tonnes of apatite concentrate and 22,390 tonnes of single superphosphate (1.62t SSP/tonne of concentrate).
The phosphate resources of Sukulu have been investigated intensively. A comprehensive economic and engineering study was carried out by Bearden-Potter Corporation of Florida (financed by the World Bank) in the early 1980s (Bearden-Potter Co. 1982). Total resource is estimated as circa 230Mt by the various agencies that have been involved. However, the Sukulu phosphate deposits has yet to be developed for a number of reasons, one being the high capital investment required for the production of soluble phosphate fertilizers. In addition, the low recovery rate (7.4%) achieved in TICAF's time was a major concern both in Bearden-Potter's study as well as for other engineering consultants that have been involved since. The latest studies are due to SRK consulting group and to Nilefos. SRK produced a "scoping study" in 2010. Nilefos engaged IMMT of India to propose a technically feasible process for improving the recovery rate concentrate/mined ore. This has resulted in a process with a recovery rate of 21%. Subject to validating this result by another (pending) mineral laboratory and pilot plant tests on site, this rate of recovery is considered in the following.
Agronomic studies that are available point to the sulfur deficiency of Uganda soils and therefore to the advantage of SSP and ESP (link).
Project history and present state of development
In years 2007-2009, a project was devised by Nilefos with my participation for developing a small ore mining, ore concentration and concentrate production, and the production of soluble fertilizers for local and regional markets. This work used all previous data, the SRK work and the IMMT concentration process. It considered transforming part of the concentrate to SSP 16-18% P2O5 soluble, the other part to produce phosphoric acid and with the acid to produce triple super phosphate 42-45% P2O5 soluble. The principle process flowsheet of this project is seen here (link). Mined ore was 1000tpd or 350ktpa on a 350 days per year basis. Compared to the 160Mt resource this is only a small part of the resource ie. 450 years. The project was conceived as a "front-window" before a future wider scale project.
But this flow-sheet enables us to depict what are the options - I hope all - for developing the resource. This flow-sheet as derived from the above one, shows all options possible:
Development options
Let us now proceed with examining the options, rejecting those that are unreasonable.
1: Direct applications: These can be rejected outright on the ground of agronomic studies (link).
2: Exports of concentrates: This needs to use the trans Kenya meter gauge railway 1200km long. The railway is privatized now, but still in bad condition. A dedicated rolling stock - the product will be in fine dry powder form - will have to be invested in; the cost to Nairobi or Mombasa will be high. Then shipping facilities have to be used to transbord the product to the ships. Sea transport will add to the cost of bringing the product to distant market users. All these costs will bear on the selling price that the project can charge, decreasing the value created and the return to capital. Moreover, it seems unreasonable to have a phosphate resource in Uganda, available for local and regional consumption after transformation, but to sell it on the world market at a huge cost of transportation. Any international development bank eg. EIB or ADB, may object to this in my opinion (EIB I am sure and ADB probably).
An additional argument against exports relates to the sticky issue of displacing the local population living on the sites of the deposits. This crucial problem remains as yet unresolved (link). There are approximately 2000 families involved and with the number of persons per household in Uganda (6), this means more than 12000 people. The dispute is about compensation. The people accept the project and the idea of being displaced but don't accept the terms of compensation proposed. Assuming the issue will be resolved, it seems crazy that this should be for permitting in the end, to export the product of the project to distant India.
I therefore reject exports as the main and initial end of the project, and consider that the whole of concentrate production will be used and transformed for local and regional uses in east Africa. If exports can be considered, they will be as a later addition to the project ie. additional mining of ore and ore beneficiation at costs ex-works and they will depend on the costs of transport to their distant place of use and competitiveness vis a vis other sources for the importer.
3: Transformation to fertilizers
There are basically two modes (*) of transformation to fertilizers having soluble P2O5 content for improving plant growth, namely single superphosphate SSP obtained by reacting concentrates with sulfuric acid and phosphoric acid. The latter is an intermediate that is then used to produce higher grade and more soluble P2O5 fertilizers ie. enriched single superphosphate ESP and triple superphosphate TSP, as depicted on the diagram above.
(*) for a more complete knowledge of fertilizers that can be produced see this link extracted from IFDC's study of 1988 by Owens (phosphate alternatives for Uganda).
Now the question is do we produce all of these, ie. SSP, phosacid, TSP and ESP and in what proportions; do we produce SSP and phosacid with ESP and TSP; or do we produce only SSP with no phosacid? A tree like set of alternatives is shown here (link) which we shall examine after the next section.
4: Transformation to phosphoric acid
The technical and economic feasibility of producing phosacid critically depends on concentrate quality namely on the absence or low content of feral, ie. association of iron and alumina minerals. The presence of feral is the cause of high viscosity of the slurry of concentrate attacked by sulfuric acid, viscosity which is deleterious for the filtration and separation from gypsum, which causes losses of acid to the gypsum and a decrease of P2O5 recovery. Laboratory tests done by FOSKOR on this aspect were not entirely positive (link). These tests were performed on bulk ore samples and concentrate produced by FOSKOR in their laboratory, before the IMMT process was developed; moreover they were criticized by NML on the ground of the origin and treatment of the samples (link). Notwithstanding, for phosphoric acid to become factual, additional tests have to be done on concentrates produced by the small pilot test runs.
I think the question revolves around the phosacid plant. Here again, comes the question of exports. The railway problem is still more complicated for phosphoric acid as its transport would require dedicated tanker wagons, the danger of spills and the like and because of the 22t per axel limit a low payload of the wagons. And the argument against exporting to distant markets instead of using the resource for Uganda and the region, is much heavier. I therefore reject exports of phosacid in the initial stages of the project.
So now, we can examine the phosacid plant for local uses ie. combining to produce ESP, or producing the ESP and TSP.
I think the issue is first about plant capacity. In the small project of 2009, a phosacid plant producing 41tpd of acid was considered; this amounts to about 14-15ktpa which is a very small plant indeed (link). Data available in this link show that no such small plant exists. It may be possible to make a "one of", but capital and operating costs may be prohibitive. So we should think of a plant of small capacity as seen in the above phosacid plant data base. A capacity of 120kpta P2O5 is therefore considered.
Let us now go backwards from the phosacid plant of 120ktpa P2O5 and see the implications on concentrate and mined ore. This exercise is shown in this html formatted excel sheet (link) of which this schema diagram is extracted (link). Tonnages (annual and per day) are found in the "masses" tab of the xl sheet.
The project is based on 120ktpa P2O5 phosphoric acid capacity which is used to transform all the concentrate produced to ESP 36% P2O5. Concentrates from mined ore are produced in two streams: one representing 72% of total has a P2O5 content of 40-42% P2O5; the second representing 28% of total has a P2O5 content of 33% P2O5. The concentrate of the second stream is used to produce SSP 18-20% P2O5; the concentrate of the first stream is used to produce phosphoric acid. This acid is used to futher acidulate the SSP produced to ESP increasing its P2O5 to 36%.
The alternatives depicted in the tree (link) can be considered in the diagram (link) in the following manner: exports of concentrates to India by building a second concentration plant of same capacity; exports of ESP to India by building a second phosporic acid plant of same capacity 120ktpa. In case of excess of ESP for local/regional market, such excess can be exported.
Prices
1:SSP and ESP:
SSP price should be viewed as the "poor farmers'" price, ie. those farmers that produce foodstuffs for the population at the purchasing power of people, prevalent in Uganda and the region. Those farmers cannot use fertilizers at international prices. Farmers that export foodstuffs eg. coffee, tea, on the international markets can pay higher prices for fertilizer inputs that increase the productivity of their crops, because international prices for those crops can support those prices. Most of the imports of fertilizers are probably used by export crop farmers. Subsidies for "poor farmers" is a policy that is economically justified for this as in India for SSP, for the time purchasing power related to economic growth remains low.
SSP price should be the basic price, related to P205 total content of the order of 20-22%, P2O5 water soluble of the order of 16-18%, and other useful elements for the soils of which sulfur. ESP may be deduced from SSP price, considering increased P205 total content, increased water soluble P2O5 and the sulfur content. Hence ESP price can be calculated from SSP price using these advantages.
Price of imports of SSP should not be considered for the project, because of very high inland transport costs; such prices are only accessible to export crop farmers. Because there is no market price available, and because it will be difficult to obtain such information, I suggest we consider a price of SSP and ESP resulting from it (for phase 2), by considering a price that will give 12% return to Phase 1 of the project. 12% return for a mining project is a good return because in constant money value and considering opportunity cost of capital of 5%. If opportunity cost of capital - less inflation risk - is higher than 5%, I suggest considering that cost of capital plus 7%.
Once these prices are established, they can be tested on the market with export crop farmers and "poor farmers" doing interviews and consulting with ministry of agriculture, professionals and university specialists in Uganda. The fact finding question is to know whether the quality of fertilizer proposed ie. ESP is a utility for both producer and consumer and if the price set for the exchange is correct ie. affordable. If affordable for export crop farmers but not for "poor farmers", then a form of subsidy may have to be considered.
Just for an exercise, I tried this method with the financial study that we did in 2009, where we were producing SSP (18% P205) and TSP (45% P205). TSP price calculated from SSP would be 45/18 more ie. 2.5 more. The SSP price that give 12% IRR is 250$/t and 620$/t for TSP.
2: Concentrates for exports:
Concentrates for exports is a question mark depending on the cost of railway transport, port handling and shipping cost. I have considered export of concentrates as an incremental project of phase 2, ie. a phase 3. On the basis of 500ktpa of concentrates destined to GSFC's Baroda site in India. Likewise as for SSP. Phase 3 will therefore be an incremental capital and operating cost whose rate of return should be considered independently. Likewise as for SSP and ESP, I suggest to consider a price giving 12% rate of return for this increment. It will be for GSFC with NML, after adding transport and sea cost, to calculate whether the landed cost Baroda is competitive.
Conclusion: Having reached this stage of the trade-off study of options for developing the project, the capacity of the phosacid plant is the only parameter to play with. We can run basic economic calculations with different combinations of phosacid capcity and mine lifetime; the shorter the lifetime, the higher is capacity, with a upper limit here. Also I strongly believe that we should visit agriculturalists to obtain quotes from them on quantity, quality of fertilizer and prices they are willing to pay, on the basis of this trade-off study.
The project is based on 120ktpa P2O5 phosphoric acid capacity which is used to transform all the concentrate produced to ESP 36% P2O5. Concentrates from mined ore are produced in two streams: one representing 72% of total has a P2O5 content of 40-42% P2O5; the second representing 28% of total has a P2O5 content of 33% P2O5. The concentrate of the second stream is used to produce SSP 18-20% P2O5; the concentrate of the first stream is used to produce phosphoric acid. This acid is used to futher acidulate the SSP produced to ESP increasing its P2O5 to 36%. ESP produced is 460ktpa.
The alternatives depicted in the tree (link) can be considered in the diagram (link) in the following manner: exports of concentrates to India by building a second concentration plant of same capacity; exports of ESP to India by building a second phosporic acid plant of same capacity 120ktpa. In case of excess of ESP for local/regional market, such excess can be exported.
