Controversial UK potash project nears decision day

By Rod Nickel

NEW YORK, May 20 (Reuters) - Sirius Minerals PLC (Other OTC: SRUXF - news) , the British company behind a controversial proposed potash mine, said it hopes to win a key regulatory approval this summer that could lead to production within four years.

Sirius aims to be the biggest producer of granulated polyhalite, which contains multiple crop nutrients such as potash, sulfur and calcium.

The company is also awaiting results of a feasibility study this summer before proceeding with the mine in England's North York Moors National Park.

Polyhalite, unlike conventional muriate of potash (MOP), contains little chloride that is harmful to fruit crops. The company expects to sell it at a huge premium over MOP, of which there is excess global mining capacity.

"We've got a product that is better for the environment and better for food productivity," said Chief Executive Chris Fraser on Wednesday on the sidelines of a BMO investor conference in New York.

There is no reason to delay the project just because there is a surplus of the conventional potash form, he said.

Sirius' London shares have gained 83 percent this year as of Monday's close. A national park authority committee will consider on June 30 Sirius' application for the York Potash mine, which could produce 13 million tonnes annually, and its transportation system.

Sirius would move ore underground by conveyor 36 kilometers (22 miles) to port, and build headframes below surface to minimize the $3-billion mine's impact on the park's moors and forest.

But Ruth Bradshaw, policy and research manager at Campaign for National Parks, said the mine is incompatible with a national park.

"We're very concerned about the threat that this mine poses and the damage it will cause to landscape, biodiversity and recreational activities," Bradshaw said.

York would be the UK's first new potash mine in 40 years. Israel Chemicals (NYSE: ICL - news) , the world's only polyhalite producer, said last year it would expand UK production.

Intrepid Potash (NYSE: IPI - news) owns polyhalite resources in New (KOSDAQ: 160550.KQ - news) Mexico, but hasn't developed them because of polyhalite's physical hardness that makes it difficult to mine, and relatively low potassium content.

"If for some reason, someone figures out how to turn polyhalite into a highly marketable product, we're very confident in our ability to participate," said Intrepid CEO Bob Jornayvaz, in an interview.

Sirius has sales commitments for 6 million tonnes of polyhalite annually from buyers worldwide.

The company will soon look to raise $1 billion in equity and debt, Fraser said. (Reporting by Rod Nickel; Editing by Phil Berlowitz)