Call for more grit hits Cleveland Potash growth

Mar 4 2010 by Iain Laing, The Journal

A MINING company has warned that its strong growth could be curtailed after the Government called on it to ramp up the production of gritting salt as part of efforts to keep Britain's roads open during the cold snap.

Since the start of December, Cleveland Potash has seen the production of salt at its Boulby mine in Saltburn-by-the-Sea, increase by 22%, compared to the same period last year, as demand has soared in the snow and ice of the harshest winter that the country has seen for 30 years.

An extra 14,000 tonnes of salt a week is being produced, taking total output to 30,000 tonnes – enough to grit up to 150,000 miles of road.

However, this has meant staff redirecting resources away from its core production of potash, which is used in fertilisers around the world and is much more valuable commodity to mine.

The firm now believes this short term shift in focus will have a “significant financial impact” on its operations, as salt is usually produced as a by-product of potash mining and covers only 10% of the mine’s operating costs.

Cleveland Potash, which employs 1,000 workers at the mine, has enjoyed strong growth over recent years, with its latest figures showing that the firm almost doubled its huge turnover from £101m to £199m in the year ending December 31.

This was helped by a boom in the demand for potash, a re-investment in underground mining equipment and the acquisition of Spanish mining company Iberpotash SA. As the mine – which is Europe’s second deepest at 1,400 metres – produces half of the UK’s output of potash, the company believes that the stall in production will have the effect of heaping further price pressures on the food sector.

Cleveland Potash managing director Graham Clarke said: “Currently, there is a strong demand for potash and, in order to meet the request for continuing high levels of salt output, we have had to ask potash customers for their agreement to delay deliveries.

“Several have agreed to do this, despite the fact that, in some cases, they will have to suspend production and incur financial losses.

“The reduction in our potash production also has a significant financial impact on our operations.”

Cleveland Potash was among three companies that were called upon by the Department of Transport to ramp up their salt production in December.

The Government has since created the “Salt Cell” – a forum comprising the Met Office, Government and local councils – to decide on future strategy after it was heavily criticised for failing to ensure there were sufficient supplies for gritting highways.

It is believed the Government is now planning to hold a “salt summit” within the next few weeks to thrash out a future policy with salt suppliers.

“The Salt Cell has recognised that, for the second winter in a row, we are doing everything possible to keep customers supplied and has enabled us to continue mining salt at a high level by agreeing a price which reflects the costs of production,” said Mr Clarke.