Costs at global salt producer K+S Group’s Ashburton project near Onslow have blown out by more than $400 million following revised costs and inflationary pressures.
The multinational salt producer unveiled the proposed project in 2016 with an estimated price tag of $350 million before it was upped to $430 million last year.
But the Ashburton Salt plan was described as an $850 million project in a statement released by K+S regarding its environmental review document released to the public today.
Managing director Gerrit Gödecke said the original price was based on preliminary plans only.
“Since then, detailed engineering has been completed, providing a more accurate indication of costs,” he said.
“In addition, the economic environment in Australia over the past few years has had an impact.”
The proposed plan involves developing a solar salt facility, mainly comprising large salt lakes, to produce 4.7 million tonnes of salt per year.
The site location, about 40 kilometres south-west of Onslow, has been deemed as an environmentally sensitive area by the Environmental Protection Authority.
K+S’s plan has been tied up in environmental approvals for more than six years and the company has spent $10 million on the studies, according to Mr Gödecke.
Based in Germany, K+S made several major modifications to its initial plan in 2021, including slashing the proposed footprint by almost one third to reduce its environmental impact and increase output.
At the time, the company unveiled an 85 per cent reduction of the project development envelope, a 23,000-hectare decrease in the size of its road development envelope, and a plan to halve the number of seawater intake locations.
Mr Gödecke said the release of its environmental review document marked a significant milestone for the Ashburton Salt project.
“We have spent $10 million and six years on environmental studies alone to get the project to this stage,” he said in today’s statement.
“It is good news that the people of Western Australia – in particularly Onslow, where the project will be located – will be able to see the full project details and understand the weight of the science underpinning them.”
Mr Gödecke said the project was significantly smaller than other proposals for the area.
“At every step of the way we have engineered this project to be smaller in scale, with a far less impact, than what we first planned,” he said.
“As we discovered more about the way the environment worked in the area, we altered our plans to account for it.
“As a result, we have created a project that has minimised potential impacts while creating significant value for the local community.
In May, K+S struck a native title agreement with Thalanyji traditional owners for the project.
Elsewhere, West Perth-based BCI Minerals announced a final investment decision for its Mardie potash project in October 2021, estimating at the time it would cost $1.2 billion to develop the project located 80km from Karratha.
The company released a series of project updates over the course of 2022 that exposed worsening cost pressures.
By August, BCI halted the awarding of new construction contracts while it undertook a review and updated its costings for the project.
In November, BCI said the cost of building the workers village, seawater intake and first ponds was expected to reach $160 million, which was up 45 per cent from the initial cost estimate of $110 million.