Potash Find

Anything pertaining to railfanning in Michigan.
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AARR
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Re: Potash Find

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When the salt/potash mine in Hersey was being developed in the mid 90's there was a serious effort made to rebuild the line from Clare to Hersey/Reed City. TSBY offered engine and rail. I'm not sure what killed the effort. Might have been lack of funding or NIMBY's, can't recall :?
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Standard Railfan
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Re: Potash Find

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Doktor No wrote: hey, lets rebuild the PRR from GRR north? I'm all for that especially if it tee's off the folks in Rockford by doing it. 8-)
Now you are talking... :D

Clare to Reed City is probably the best bet. Most of the ROW is undisturbed. There is also White Cloud to Big Rapids....

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Saturnalia
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Re: Potash Find

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Or shorthaul truck to Clare/Baldwin? Re-laying track costs $$$$...there are dozens of examples of shorthaul trucks to railroad loadouts. The LSRC has one with stone in Alpena, for example.
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midland sub
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Re: Potash Find

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Great thread at TO about this. Long story short the potash market isn't profitable enough to make this work rail wise at this point.

Sppengelly
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Re: Potash Find

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AARR,

Do you have any further information about said project in the 1990s? Were there any published documents, news articles or filing that I might be able to find?

Please advise and thanks in advance.

-Sean

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AARR
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Re: Potash Find

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Sppengelly wrote:AARR,

Do you have any further information about said project in the 1990s? Were there any published documents, news articles or filing that I might be able to find?

Please advise and thanks in advance.

-Sean
I received my info from a newspaper article (can't recall whom), Mr. TSB (a member here and currently the lead in the Waffle House thread :lol: , and others who were close to the situation. I don't know the answers to your other questions. If you find anything please post here :)

Edit - The Ann Arbor Railroad Technical & Historical Association also had an article.
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Raildudes dad
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Re: Potash Find

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Search potash mine on this site

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Re: Potash Find

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In the mid 80's Conrail was asked to look at taking over operations of the old GR&I up to Reed City and rehabilitating the track to service a potash mine. Chessie still served Reed City but they were expected to pull up their rails. The scheme was to use hot water to dissolve and extract the potash. The rail moves would be coal northward for the boiler that would generate hot water and then potash south. Conrail toured the track and put rough figure to rebuilding. The traffic wasn't robust. They estimated two trains a week. Conrail had need for capital elsewhere and wasn't going to put up the money to rebuild the track but were willing to contract the work for the state. The state had it's own recession related issues and wasn't going to put up the money. The mining operation passed too.

http://www.wmich.edu/news/2013/09/9197

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Saturnalia
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Re: Potash Find

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Just did some estimating of how many carloads might be shipped from a new mine:

Potash's density is about the same as Coal. They say here they will produce around 1 million tons. CSX delivers around 6 Million tons of coal per year to West Olive annually, in about 350 130-car unit trains, or 45,000 carloads, give or take a few thousand.

One sixth of that is about 7,500 carloads, if the potash was loaded at the same rate (tons/no. of railcars). But they say Michigan Consumes 300,000 tons, so a third of that is "gone", so rough estimate of 5,000 carloads per year, at least in theory.

Not trying to draw definitive conclusions or anything of that nature, but getting a rough idea of the traffic that might be generated.
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AARR
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Re: Potash Find

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MQT3001 wrote:Potash's density is about the same as Coal.
Can someone confirm this? Based on the different sized cars used for each (coal cars being smaller) seems coal is much denser.
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Saturnalia
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Re: Potash Find

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Doktor No wrote:MQT figure 110 tons per car...that would be the load plus the tare weight...total would be 143 tons per car. 286,000 total. Cars empty weigh in at the 60,000 lbs range for the most part...
700,000 tons / 130 tons per car = 5384 carloads.

MQT had 15,000 listed when they got bought by RA. GLC states 14,000 on their site. So one can see this would be a large increase for either road.
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Saturnalia
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Re: Potash Find

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AARR wrote:
MQT3001 wrote:Potash's density is about the same as Coal.
Can someone confirm this? Based on the different sized cars used for each (coal cars being smaller) seems coal is much denser.
A Google search yielded about 1.3g/cm3 for each...

Potash: 1.28 http://www.aqua-calc.com/page/density-t ... nce/Potash
Coal: 1.35, from the same site.
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Re: Potash Find

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Doktor No wrote: Now if this resource is THAT PURE AND VALUABLE and according to the article potash prices have skyrocketed...why would Mosaic let it wither on the vine if you will? We shall see if this new enterprise can run with the ball and move some product. SOunds like a fascinating venture to me. I hope they get it going!!!
Except the law of supply and demand says that when products are 'equal' when supply increases, then prices come down. Plus, they're competing against every Potash producer out there in N America. Those firms are established, already connected to the national network, and can probably competitively out price their product against a 'start up' firm. If it is really 'pure' are the consumers going to be willing to pay a higher price for the 'better' product, or continue to use a 'lower quality' which may be 'just as good' for fertilizer use?

Most farmers view using fertilizer in larger quantities as a 'luxury'. When potash prices climb, fertilizer prices climb, and then demand from farmers drops. Again, law of supply and demand. This was seen with the ethanol 'boom'. Price of corn went up, farmers made more on the short term, bought TONS of fertilizer with the windfalls, and the next year the price of corn came down because yields were higher. Additionally, with the increase in demand for fertilizer, the price of THAT went up, and farmers the following year didn't buy as much because of the increase, and prices returned to 'normal'.

They'll let it 'wither on the vine' if the cost of extracting and getting it to market would be too difficult to recoup. As midland said, profit margin isn't 'big' enough to make it feasible to do everything it would take to get to market.

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Standard Railfan
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Re: Potash Find

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The purity of the deposit will more that likely offset any "advantage" existing producers have.

From the WMU press release "The Michigan deposit, WMU's Harrison says, is the purest and highest-grade potash being produced globally—600 percent higher than that being produced in New Mexico's vast Permian Basin. It is also twice the grade of deposits found in Canada and Russia,..."

The higher the purity the less "raw" ore that has to be mined and less energy input to separate the product from the other minerals for a given volume of product.

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Re: Potash Find

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So I read this article http://www.capitalpress.com/article/201 ... /130919951

Mosaic donates 4000 boxes of core sample their predecessor PPG took in the 2 county area years ago to WMU and a professor "discovers" all this high grade potassium chloride. Mosaic and / or their predecessor let the mineral rights in this area expire so this "junior" exploration company purchases the mineral rights. Certainly, the Moasic / PPG geologists must have looked at the cores.

Now they say they are going to be mining in 2014. I seriously doubt it will be an open pit strip mine. The NIMBYS will stop that. I kinda doubt it will be an underground mine. That only leaves an solution / injection well process. That will need a DEQ permit for the disposal of the water. Further more, Mosaic owns and operates one there already. That one took years to get permitted.

Now if there was such a market for this potash in MI, why wouldn't Mosaic be all over that?

This article yesterday isn't very positive on potash pricing. I think the big boys can beat any pricing the little guy will put up.

http://www.mining.com/agrium-predicts-3 ... gdrlluoGqw

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Re: Potash Find

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Sorry Dok, I'm skeptical on this one. I've got a file on transloading from Hersey. What I see happening is Mosaic buying out the mineral rights from Michigan Potash if the stuff is that good. Mosaic already has a plant up and running. That's a lot cheaper than a completely new plant. Time will tell

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Re: Potash Find

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Ok, there are a few things that are kind of driving me crazy with this discussion. There are two ways of determining how big the opportunity is. The simplest way is 1,000,000 tons per year ÷ 100 tons per car = 10,000 cars per year. Or you can take 1,000,000 tons per year ÷ 110 tons per car = 9,090 cars per year. The thing you need to understand about potash is it typically moves to two types of locations. 1. Big terminals for export (example Thunder Bay) or regional distribution (example The Andersons in Webberville) 2. Smaller fertilizer dealers that sell directly to farmers. The big terminals are almost always good for 286k, a large majority of the smaller dealers are on lines only capable of 263k (example North Central Co-op in Coldwater on the Indiana Northeastern).

As it has been mentioned Michigan potash is extremely high quality which changes the dynamics of the situation. Some of the potash does get trucked directly to the farm or small fertilizer dealer, but Michigan potash usually gets trucked to a terminal to get blended with lower grade Canadian potash to bring up the quality. For this reason Michigan potash can fetch a higher price than other N. American deposits.

The potash in Michigan is in "bands or veins" that range in depth. I can't remember exactly what Mosaic told me, but i think it ranges from 6 to 10 feet in depth or something like that. Because of the way this formation sites Mosaic told me it is more logical to solution mine here. Its important to know understand the side effect that comes with solution mining in this area. Michigan sits on a massive salt domes which is why you have Dow in Midland, Oxy in Ludington, Detroit Salt in Detroit, Morton in Manistee & a huge number of salt mines in Ontario. When you solution mine you will also extract naturally occurring salt. So in Hersey for example, for every ton of potash that Mosaic produces they also product two tons of salt as a byproduct. So this means if this new mine actually opens & they produce 1 million tons of potash by solution mining they will likely produce 2 million tons of salt as a byproduct assuming they have the same a similar breakdown to what Mosaic has. That means the opportunity here could be as big as 30,000 cars per year. For that kind of volume you can easily justify building a rail line depending on how far you have to go in addition to a couple other smaller factors.

The last point is that potash is VERY price sensitive, so adding trucking & transloading can be enough to kill a deal or prevent potash from leaving the region which means they only serve the truck market as is the case with Hersey. Also, the Michigan potash is a pure white crystal & the more its handled the more product degradation you have making its value decrease each times its handled. When I first went to the mine in Heresy they didn't even want to talk about potash because of the handling required to get the product in a railcar at Baldwin. Instead they just wanted to talk about salt which basically went nowhere, in part because of the bad experience they had in Cadillac.

To make the move for potash work out of Baldwin a few years ago two important things happened. 1. Mosiac was able to put a small wax coating on the potash to help protect the crystals from breaking down each time it was handled. 2. The potash market was all over the place & with the currency situation in addition to the potash price it was favorable to export potash to Brazil.

There is a big trend throughout the nation to switch to liquid fertilizer which could impact how potash moves, but we shall see. There are also chemical consumers of potash & more recently it is believed that potash can be used in the fracing process.

Time will tell if this mine actually opens, but it could have a huge impact on the railroads in this region IF the market conditions are right. I'm off my soap box.

Mike H

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Re: Potash Find

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New Contender enters the Potash Market, But in Canada not Michigan, Who is developing the Michigan project ?

More ash, more food

Another notable move in the "ash" space is the billions that BHP Billiton (NYSE: BHP ) is spending to build a potash mine in Canada. Potash is used for fertilizing food crops. BHP's other businesses are things like iron ore, copper, coal, and oil. Clearly, this shift is a little far afield, but that will bring with it important diversification benefits.

The problem is that the mine is just a hole in the ground and won't produce any potash for years to come. However, that's one of the reasons why BHP is the perfect company to develop it. As the CEO of Potash Corp. (NYSE: POT ) explains, potash is a "difficult business to get into. There are large barriers to entry." Those barriers are largely time and money. BHP has plenty of both, particularly since it has remained profitable despite the downturn in most of its core business lines.

And potash is likely to be increasingly important since improving crop productivity will be vital to support growing populations in emerging markets. That's one reason why Potash Corp. is feeling so positive about its future despite some recent pricing pressures in the industry, which accounts for about half of the company's top line.

That said, Potash is quick to point out that demand isn't based on cost. Farmers buy the fertilizer they need; cheap prices don't spur additional purchases. Thus, price wars aren't likely to be a long-term concern. In fact, BHP's project should benefit from the fact that it isn't up and running yet, since that lead time will allow global demand to increase.

From the "ashes"
Although investing in the development of a potash mine is going to be costly for BHP today, the long-term benefit should be an even more stable and diversified business. Natural Resource Partners, meanwhile, will start to see the benefit of its soda ash investment right away. That should further diversify it away from its heavy reliance on coal. These "ash" plays appear to be solid moves for both companies.

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Re: Potash Find

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Am I the only one who pronounces "potash" like Jed Clampett would? :lol:
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Saturnalia
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Re: Potash Find

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J T wrote:Am I the only one who pronounces "potash" like Jed Clampett would? :lol:
example?
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