Taxpayers face $83m loss in another potash collapse
More than $83 million of taxpayers’ money was in doubt on Friday after sulphate of potash aspirant Kalium Lakes collapsed into receivership.
Restructuring firm McGrathNicol took control of ASX-listed Kalium on Friday after the potash aspirant failed to find further financial support for its slower-than-expected development at Beyondie Lakes in Western Australia.
Kalium’s project at Beyondie Lakes in Western Australia.
Barely two years ago, Kalium was in a race against ASX-listed Salt Lake Potash to be the first producer among a wave of companies trying to extract potash from beneath ephemeral lakes in the Australian outback.
Advisory firm BDO calculated that $528 million of funds flowed into the unproven sector during its boom year of 2020, making it second only to gold as the commodity attracting the most investor interest that year.
But the rush to be the first producer has proved fatal for both Salt Lake Potash – which went into administration in October 2021 – and Kalium, which collapsed on Friday.
Both companies failed to perfect the technical aspects of extracting groundwater from beneath salt lakes, and then using evaporation and processing to produce a saleable potassium salt for use as a crop nutrient.
“Both those companies went into development without the density of empirical data to back up the design,” said potash industry veteran Matt Shackleton.
“They were a bit too keen to move early and quickly… and they damaged each other as a result.”
Kalium had started producing sulphate of potash in small batches, but was cash-flow negative despite working in an era of relatively high potash prices.
The receivers said on Friday they would try to sell or recapitalise Kalium’s business as soon as possible.
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