Highfields Resources (ASX: HFR) produces potash from a number of small sites in Spain, in the Ebro Valley. Potash is an essential part of modern farming, we'd all starve without someone digging it up and supplying it. That it's an Australian company in Spain is just an example of how mine finance works. The Australian market simply is a good place to raise money for a mining adventure, the market in Madrid isn't. Those who need investment always will gravitate to the markets that have the investors looking for that type of investments. The Australian market has a lot of experienced mining investors so that's where companies set up to mine elsewhere.
Potash itself has had an interesting recent history, there were suspicions of a cartel which was then broken, a major producer onto the global market is in Belarus which has certain problems these days and so on. Diversifying supply is desirable therefore. It's also true that the environmentalists keep telling us we're about to run out of this vital fertiliser but then that's nonsense. That this mine is now cleared to go ahead shows us that there's lots more potash out there that can be got if we really go looking for it.
Highfield Resources share price from ASX
The real issue here for Highfield Resources is that it shows us what so much of mining is really about - bureaucracy. For the story of the announcement is that they've finally been granted the last little piece of planning permission required. They had to deal with several different local authorities in Spain - not known as a place with speedy bureaucrats - and piece together that huge pile of documentation and permissions. Having got all of that they can now go to the process of gaining finance to actually go and mine.
In fully technical terms that Muga Mine now moves from being a mineral resource - something we know is there but cannot insist that it's mineable - to a mineral reserve. We now have proof that it can be mined, using current technology and prices, make a profit and we've all the licences to do that. But note what this means about those environmental worries about running out. Mineral reserves are something that humans make - by gaining those planning permissions. That's what the definition is. There's plenty of potash out there, the shortage is of people licenced and built to extract it.
That is, as Highfield Resources has just shown us, there's no shortage of minerals, just a shortage of mines.
