Potash development company Emmerson states that the environmental- and social-impact assessment (ESIA) approval process for its Khemisset project, in Morocco, remains the key priority for the company.

An important consideration is the impact of the project on water resources in the region – a sensitive issue in the context of climate change and recent droughts, the company notes in an update on its corporate and operational activities at Khemisset for the second quarter of this year.

Emmerson stresses that the issues raised have centred on the disposal of brines through deep well injection, the storage of salt tailings at surface, the use of water from local sources and the project’s impact on local highways and land users.

The company says it has invested considerable time and resources on developing robust solutions in all these areas – reflecting international best practice – including using dry stack tailings and sourcing wastewater rather than fresh water from nearby reservoirs.

The company has also committed to completing in-situ injectivity test work before construction to confirm, definitively, the feasibility of deep well injection as a means of disposing of brines. This will be done while examining alternative means to process brines in order to minimise, or even eliminate, the requirement for brine disposal.

Following a recent evaluation meeting, regional investment authority the Commission Régionale Unifiée d'Investissement (CRUI) was unable to approve the ESIA application.

Consequently, the company has exercised its right to refer approval to the Ministerial Committee, which is chaired by the head of government and includes several national Ministers.

The company believes the measures taken to address all concerns raised, combined with the project's significant economic benefits and contribution towards addressing food security, are compelling and underline its strategic importance to Morocco.

On this basis, Emmerson remains confident it will receive approval for its proposals.

TECHNICAL WORKSTREAMS

Emmerson states that the work on the seven technical packages that make up the basic engineering workstream is now largely complete, with final drawings and reports only remaining in respect of power supply, highway junction, mine-site infrastructure, and portal and decline designs.

Once completed, this information will be available for incorporation into an updated bankable feasibility study (BFS), which will get under way once environmental approval has been received, and is likely to take about six months to complete.

The BFS will include a detailed financial model based on the latest design of the plant and mine workings, as well as reflecting cost inflation since the feasibility study was completed in 2020.

PROJECT FINANCING

Following environmental approval, the company will proceed with the process of fundraising for the Khemisset project. Due diligence and legal work will be required in respect of the bank debt, with the BFS a key part of this review.

As far as possible, due diligence and the BFS work programmes will proceed in parallel to minimise the time between receiving environmental approval and reaching financial close.

"Our primary focus has been obtaining the environmental approval for the project, and a considerable amount of rigorous and detailed work has gone into addressing all of the issues raised by the relevant authorities, which have mainly related to water. The environmental approval has recently been referred from the regional level up to the national Ministerial Committee.

"In reaching their decision, we remain confident that senior government officials on that committee will take into account the significant amount of time and investment that has gone into minimising the environmental impact of the project, which we believe aligns closely with the government’s strategy regarding sustainable development.

“Emmerson is firmly committed to maintaining the highest environmental standards in Morocco at every stage, from construction through to production,” CEO Graham Clarke comments.

He also points out that Emmerson is noting a softening of inflation in capital costs, along with commodity and energy prices.

"Energy forms the largest single part of the operating costs. The improvements we have identified during the basic engineering will also need to be quantified and used as updated inputs for the financial model.

“We believe cost inflation will apply to all potash projects, and we expect Khemisset to remain in a competitive position on the cost curve, not least owing to its favourable geology and location,” he says.

He adds that Morocco plays an important role in the global fertiliser market, building on the kingdom's large phosphate product exports.

“The fast-growing market in Africa, on top of established demand from Europe and Brazil, makes this an exciting moment for potash. Once the environmental plan approval process is completed, we look forward to moving towards the finance and construction of this nationally important project," he says.