Emmerson: PEA for Sale of Salt By-Product

9th July 2019 | Emmerson PLC


  • Internal Preliminary Economic Assessment completed for the sale of de-icing salt into the East Coast US market
  • Khemisset Potash Project estimated to produce more than 4.6Mtpa of high-grade salt as a by-product of its potash operations
  • PEA assumes conservative sales of 1Mtpa into the large USA de-icing salt market
    • East Coast US market is estimated to be over 10Mtpa
    • Upfront capital required US$12 million including 30% contingency
  • Potential to deliver additional nominal post tax NPV10 of up to US$133 million based on historical US de-icing salt prices*
    • Strong post tax cash margins of nearly 40%
  • Additional post tax NPV10 increases to US$266 million assuming 2Mtpa of salt sales
  • Strongly value accretive to Khemisset’s already outstanding post tax NPV10 of US$1.14 billion assuming industry expert potash price forecasts
  • Partnership discussions ongoing with suitable groups with deep salt market expertise to unlock value from this additional potential revenue stream
  • Next steps include further detailed market studies, product specification reviews and integration to Khemisset Project process design
  • The Company continues to make rapid progress on its outstanding Khemisset Potash Project and is on track to deliver the Feasibility Study in H1 2020

Emmerson Plc (“Emmerson” or “the Company”), the Moroccan focused potash development company, is pleased to announce the results of an internal Preliminary Economic Assessment (“PEA”) completed on the potential sales of de-icing salt by-product (“salt”) from its 100% owned Khemisset Potash Project (“Khemisset”).

The internal study showed the potential for salt to be marketed in the East Coast US de-icing market competitively, delivering attractive margins, due to the salt being a waste by-product of potash production, the Project’s locational advantages and the outstanding infrastructure in Morocco. To view this announcement, please use the following link: http://www.rns-pdf.londonstockexchange.com/rns/8637E_1-2019-7-8.pdf

Hayden Locke, CEO of Emmerson, commented:

“The PEA shows strong potential for a viable by-product business selling salt from Khemisset into the large US de-icing salt market. Based on historical received prices for incumbent producers, we see the potential for an additional US$25 million of post-tax cash flow, on average, during steady state operations assuming sales of 1Mtpa of salt per annum – less than 25% of the total by-product produced.

“The East Coast US de-icing salt market is currently supplied predominantly from Chile, Mexico and Morocco and our analysis shows we have a strong transport and logistics advantage which will allow our salt sales to be competitive into this large market.

“The Company continues to rapidly advance the outstanding Khemisset Potash and we will continue to look at other value adding opportunities as we move towards construction and production.”

Further Information

The Company is developing the low capital cost, high margin, Khemisset Potash Project, located in northern Morocco. Khemisset is forecast to produce c.800,000 metric tonnes of K60 MOP per annum over a minimum mine life of 20 years, in addition to producing more than 4.6 million tonnes of waste salt per year of operation.

Based on preliminary studies, the Khemisset plant will produce a relatively fine salt by-product with purity in excess of 95% NaCl. This purity is saleable into the US de-icing market without requiring any further product upgrading or processing, positively impacting operating costs and margins. Compaction is expected to be required due to the fine nature of the salt waste produced and the strict sizing requirements for sales in the US market.

Salt is handled and shipped using the same infrastructure as potash, so synergies are expected to be available and captured by handling two bulk products. In addition, Morocco already exports approximately 1 million tonnes of rock salt to the US de-icing salt market per annum shipped out of both the Port of Mohammedia and the Port of Casablanca. The Company will benefit from existing storage and expertise in handling in these ports. The in-land logistics model comprises of trucking to closest railway siding in Meknes then loading into trains to take the product to Casablanca port which is connected via railway. Casablanca is a significant port with capability for large, deep draft, vessels which reduces overall delivery cost to the US market.

Emmerson PLC investor relations video

Five Minute Pitch TV recently filmed Hayden Locke, CEO of Emmerson. He provides an investors overview of business in the video below – the interview focuses on Emmerson’s operations, the geopolitical situation in Morocco, the global potash market and the companies forward strategy.



Emmerson PLC Investor Relations

Hayden Locke, CEO of Emmerson PLC in an investor relations video for Five Minute Pitch TV

Click here to view Emmerson Investors Videos