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as the value of 1% Kp contained in the product) the net selling prices are $3.40 per unit
K 2 0 in langbeinite and $1.20 per unit K 2 0 in sylvite products. Market prices have varied
over a considerable range, but this is the best estimate of the current price in relationship
to cost. The prices fall well within the high and low averages over the last i2 years (see
Table 1).
Estimate of capacity
The reserves of the 4th and 10th ore zones are large, and no attempted was made
to optllIlize the production rate to maximize profit in terms of rate of return of invested
capital. Instead, the capacity of the langbeinite was set at 350,000 product (containing
22 % K 2 0) tons per year, which is equivalent to about one-third of the current production
of the entire Carlsbad Potash District. For 10th ore zone sylvite reserves, the annual
capacity was set at 400,000 tons muriate (containing 60% K 2 0). These production rates
are within a range compatible with furure markets for Carlsbad potash products, assuming
that :he current mines are depleting current reserves.
An assumption was made that the reserves would be mined by a single operator.
The reserves of both the 4th and 10th ore zones are_]acent and to a certain extent
stacked, i.e. the 10th overlying the 4th.
Estimate of development cost and time to bring into production
For Scenario n, the cost of sinking a new man-shaft 1900 ft deep was estimated at
$10 million and the time required to commence mining as one year. In that scenario,
underground mining would be simultaneously extended into the area from IMC Fertilizer
Inc. mining operations that had mined up to the southern and eastern boundaries of the
WIPP Site. A precise location was not selected for tile new shaft other than that it be
located just northwest and outside WIPP.
For Scenario m, an estimate of $200 per annual ton of plant product capacity
resulted in $70 million for the portion devoted to production of the 4th ore zone
langbeinite reserves and $80 million for the sylvite reserves of the 10th. The total of
$150 million would include two new shafts in addition to the processing plant. Three
years would be needed to bring the new mine on stream. Some may say these costs are
low for a new •greenfield· plant, but in acruality they may be too high because the new
plant would probably involve modernization and expansion at an existing plant site where
power, railhead, warehouses, and waste disposal facilities already existed.
Historical trend of mining and processjng cost versus market price
The data presented in Table 1 indicates ·that the operators have remained
competitive over the years. AS-costs have increased have productivity and market
price. The price of the products was compared agau,,:;, the Composite Producers Price
Index and a linear relationship indicated that the price of Carlsbad potash products had
escalated in parallel with national inflation trends. AS mining and processing costs
increase for the Carlsbad producers, so will the price of their products.
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