It has been a long time since big investors started spruiking plans for new salt projects in the north-west.
THE entry of a new player to the north-west’s salt business is a sign of growth potential in a sector dominated by two companies for almost 20 years.
In September, Kerry Stokes-backed BCI Minerals received federal approval for a salt project near Karratha with planned output of 5.35 million tonnes a year.
BCI’s $1.4 billion Mardie Salt has been plagued by cost blowouts and the implosion of the local potash sector but is already significantly developed and expects to be exporting by late 2027.
It is one of three projects of a similar size pushed by major salt players in the region.
Combined, the new projects would double the north-west’s salt annual output to about 28mt.
Current north-west salt exports come from two players.
Mitsui & Co runs salt mines in Onslow, purchased in 2006, and Useless Loop, Shark Bay, which together account for about 4mtpa.
Rio Tinto is comfortably the bigger of the two, churning out 10.3mtpa from its Pilbara operations.
Rio Dampier Salt made revenue of $US199 million in the 2023-24 financial year, which boiled down to a $US61 million profit.
That profit comes from three sites – Dampier, Port Hedland and Lake MacLeod, near Carnarvon – and is divided between Rio Tinto and Japanese partners Marubeni Corporation and Sojitz.
The 1.5mtpa Lake MacLeod project is subject to a $375 million sale to Leichhardt Salt, a private company that is also weighing up a 5.3mtpa salt project near Karratha known as Eramurra.
In 2018, Leichhardt was billed as a $280 million project and has the backing of high-profile businessman Andrew Liveris, Resource Capital Funds, ConSalt, and Melbourne’s Smorgon family.
Should environmental approvals be cleared, the company is eyeing a final investment decision by early 2026.
“With the environmental approval landing in late 2025 to early 2026, that will be in parallel to us completing our engineering studies,” Leichhardt chief executive Scott Nicholas said.
“The demand side of seaborne salt is strong.
“We are seeing a lot of new demand capacity coming in from the Asia-Pacific region as forecast in China, Indonesia, and Malaysia.
“From a proximity perspective, we are very well placed to supply into that shortage.”
A pre-feasibility study finished in 2020 found a 2.4mpta operation would create 80 full-time and 200 construction jobs and generate about $2.6 billion across the life of the project.
The permanent jobs figure has since increased to 140 and output to 5.3mtpa.
Karratha would be the main beneficiary.
“Eramurra will be a residential workforce,” Mr Nicholas said.
“Depending on timing of our construction and operation of Eramurra, we may be able to lean into some of the construction workforces that are coming offline through the iron ore, and oil and gas sector.”
Construction of a greenfields transshipment port at Cape Preston East, west of Karratha, will be part of the project package.
The company will also examine marine and ground fleet automation through its bankable feasibility study.
The German
Further down the coast in Onslow, K+S Salt has been wading through the state’s environmental approvals process for its Ashburton Salt project since 2016.
Back then, the German giant burst onto the scene at a time Western Australia was considering diversification in the Pilbara to reduce its reliance on iron ore and gas, both of which were in the doldrums.
Iron ore has gone up, down, up, down, and up again in the time since K+S submitted its plans to the Environmental Protection Authority.
“Due to the market pricing of salt, you would want to be, let’s say, logistically, close to your customers, which primes Australia to be a supplier for the Asia-Pacific region,” K+S managing director Gerrit Gödecke told Business News.
“When we came here we anticipated a shorter timeframe to get the project going.
For us, specifically, it’s about the environmental approvals process that we had hoped to have done a few years ago.
“Unfortunately, we had to realise it just takes longer, especially in an environment that, over the last few years, economically, really picked up, having a lot of different projects in the resources sector basically trying to get approvals over the same desk.”
Compounding the backlog is the heightened demand on other professions K+S needs to get its project over the line.
“In 2016 and 2017, environmental specialist consultants were basically constantly ringing our phone asking if we have work for them,” Mr Gödecke said.
“Now … the same consultants that did the prior work are saying ‘Sorry, in nine months’ time we have a slot available’.
“A booming economy is good for many things, not good for the cost of a project and not good for the timeline of a project.”
That timeline blowout does not appear to have dented K+S’s confidence in the project, given Mr Gödecke is still planted firmly in WA.
Approvals aside, the German firm’s other big task has been gaining approval from traditional owners, a measure that appears to have gone more smoothly.
K+S is also no doubt mindful of the last company that tried to establish a salt project in Onslow, which drew the ire of recreational and commercial fishers, including MG Kailis, in 2010.
“We knew from the beginning that we are close to an area where a different company further south tried to establish a salt facility in the past, and we saw the blowback against that,” Mr Gödecke said.
“The community that we are closest to, Onslow, which has an existing salt production for decades, greeted us with open arms and has a very good understanding of what it means to have a salt production.
“We also went to other places [Exmouth] in order to get feedback on what people are concerned about.
“There was a concern that K+S gets this approved, and then in the future, expands southwards and makes it bigger.
“That was something we addressed by just simply dropping the tenements that we had for those areas.”
Once operational, Ashburton Salt expects to employ 135 workers on an operation that could run for more than 60 years.
The company’s European roots mean fly-in, fly-out has not been a mainstay of its operations, but in Onslow it would have to contend with a highly constrained housing market.
“We are obviously conscious that you cannot snap the finger and materialise 150 people from one day to the next in a community,” Mr Gödecke said.
“One thing that’s clear is K+S and the Ashburton Salt project will need to be part of getting this new housing into place in the future, in whatever form that will take; we cannot duck that.
“Internally, we also are not underestimating the cost for that.
“So, we’re not thinking, ‘Hey, salt is the lowest price of all those resources per tonne, so we pay the lowest wages’; it is not really going to work in that environment.”
Once environmental approval is gained, Mr Gödecke appears confident K+S is on the home stretch to get its project up.
