Rio Tinto’s plans to mine potash in Canada got a lot more serious

In a press release Friday, Acron said the joint venture estimates that the Albany prospect contains an inferred resource of 1.4 billion tonnes within the mining caverns at an average grade of 31% potassium chloride (KCl). The company put the recoverable amount at 329 million tonnes of KCl.

The companies did not disclose the costs and planned capital expenditure for the Albany project, but they have previously indicated that the KP405 discovery had enough potash to sustain a low cost operation for decades.

Rio’s incursion into the fertilizer ingredient market has been fraught with some false starts. In 2009, Rio sold its potash properties in Canada and Brazil to Vale (NYSE:VALE), the Brazilian mining giant, only to jump back into Canadian potash in 2011 in partnership with JSC Acron, represented locally by North Atlantic.

The joint venture holds nine potash permits covering 586,000 acres (237,000 hectares) in Saskatchewan’s southern region.

Rival BHP recently committed to spending an additional $2.6 billion on Jansen over the next few years, just to gain access to the deposit, but it hasn’t made a decision on when to start building the mine.

The reason, say experts, is that potash producers need prices as close as $500 per tonne as possible, so they can cover construction costs.