Why Michigan is pumping $50 million into a private potash operation

May 19: Michigan farmers pinched by rising fertilizer prices. Consumers may be next.

Located at least 7,000 feet underground, a massive mineral deposit left behind by ancient evaporated seas could be the key to a new billion-dollar industry in Michigan.

Gov. Gretchen Whitmer on Wednesday signed into law a nearly $5 billion bipartisan spending deal that includes a new $50 million state subsidy for the Michigan Potash & Salt Company.

The private firm is finalizing plans for a $1.1 billion development in Osceola County to drill, extract and commercialize part of a potassium ore deposit that stretches an estimated 2.9 million acres beneath eight mid-Michigan counties.

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The deposit contains salt and potassium chloride – commonly called potash, a critical and increasingly costly component of fertilizers used at farms across the country but primarily imported from Canada, Russia and Belarus.

The Michigan deposit might just be the “richest” of its kind in the world, according to geologists at Western Michigan University. But the challenge, experts say, is getting the minerals out of the ground, and doing so without causing long-lasting environmental damage.

The Michigan Potash and Salt Company, whose founder is headquartered in Colorado, plans to use a process called solution mining. 

The firm has already won environmental permits to drill eight Michigan wells and pump them full of groundwater, which is expected to dissolve rock and create a brine. Once extracted, the brine will be dried to produce potash and salt. Residual wastewater will be pumped back deep underground into three disposal wells for permanent storage.

The $50 million in state funding may help the company clear a final finance “hurdle” to begin what is otherwise a “shovel ready” project that could be operational in three years, said Adrian Cazal, a lobbyist for the Michigan Potash & Salt Company. 

“It's amazing that we have it just right here in our backyard,” he said of the potassium deposit. 

A coalition of clean water advocacy groups had urged Whitmer to veto the funding, arguing the potash operation will draw too much water from local aquifers and jeopardize local wetlands. They also contend a potential brine leak would create an unnecessary environmental risk.  

“We shouldn't be giving state money to a private investor with a very questionable operation in mind,” said Peggy Case of Michigan Citizens for Water Conservation, a grassroots group based in neighboring Mecosta County. 

“The damage that can occur just in the process of trying to construct something like that is going to be massive.”

But geologists and state regulators say modern engineering techniques minimize those risks, and the company says it plans to “recycle” groundwater by reusing at least 90 percent from each withdrawal as part of a “closed loop” system.

The development has powerful backers in Lansing, including Republican House Speaker Jason Wentworth of Farwell, who called it an “obvious choice” to spend $50 million in state money on the planned facility near Evart, which is in his district. 

It’s a “great opportunity to create long-lasting and high-paying jobs in northern Michigan,” Wentworth said, alluding to company projections that it will create more than 300 short-term construction jobs, and then at least 180 full-time jobs once the operation is up and running. 

Wentworth and others contend the proposed development also has national security and supply chain implications for Michigan farmers, who rely on imported potash, one of three key elements in agricultural fertilizer products that support plant growth and reduce water consumption. 

Most potash used in the United States comes from Canada, but a significant amount also comes from Russia, whose war against Ukraine has caused already elevated prices to climb again.

Potash costs have more than doubled since fall 2020, according to Theresa Sisung of the Michigan Farm Bureau, who told Bridge Michigan prices have climbed from $300 a ton to more than $800 a ton over that span. 

"There's been kind of a steady increase due to a lot of different factors," Sisung said, noting she’s seen fertilizer prices rise for her own farm, where she grows corn, soybean and wheat. "What's happening in Ukraine is just kind of compounding all of those other things."

Shipping delays and fertilizer prices are “really hurting our farmers,”said Sen. Curt VanderWall, a Ludington Republican who was part of a coalition that pushed to fund the operation in Osceola County, which is in his district. 

“Once this (new potash company) gets up and running, we do believe that it’ll be a huge advantage to our state farmers, and of course, the entire U.S,” Vanderwall said.

Rich and Pure

Geologists have known about Michigan’s potassium ore deposit since at least the 1960s, when Dow Chemical crews identified the mineral during unrelated drills. Mosaic, a Canadian-based Potash firm, operated a small-scale extraction site in the area from the mid-1990s until 2013.

That’s when Western Michigan University “rediscovered” the deposit by analyzing sample cores that Mosaic donated but had never before made public, said William Harrison III, professor emeritus and director of the Michigan Geological Repository for Research and Education.

“It turns out that it’s some of the richest – maybe the richest deposit – of potash and the purest that’s been reported anywhere in the world,” Harrison told Bridge Michigan. “The grade and quality of this stuff is higher than anything that's been commercially mined in Canada, or even in Russia or Belarus right now.”

That purity means it should be easier to "separate" and "purify" potash from the Michigan deposit, making the process "very efficient" compared to traditional underground mining operations in Canada and Russia, Harrison said. 

But because the Michigan deposit is so far underground – between 1 and 2 miles down – accessing it requires deep drilling, a costly process fraught with environmental implications.

"Anytime you drill into the underground environment, there's an opportunity for things to leak," Harrison said. "That salty brine is really nasty stuff... it's pretty toxic to the plants and things."

Still, state and federal government regulations, combined with modern engineering at extraction facilities like the one proposed in Osceola county means "the risks are pretty low," Harrison said. 

The U.S. Environmental Protection Agency and the Michigan Department of Environmental Quality in 2017 and 2018 approved well permits that will also allow the company to withdraw up to 725 million gallons of groundwater per year, dwarfing a controversial bottled water operation located six miles away.

The Michigan Department of Environment, Great Lakes, and Energy approved an air permit for the manufacturing facility in 2019.

Michigan Citizens for Water Conservation, the grassroots group based in Mecosta County, had petitioned the environmental review commission to reject the well permits. They had urged Whitmer to use her line-item veto power to reject the $50 million allocation for Michigan Potash.

“If she's giving a subsidy to a private corporation that messes up the environment, it's not good for her, in terms of her image,” said Case, the water activist who leads the group. “It’s a completely ridiculous industrial production facility in a completely wrong place.”

‘Very low risk’

Whitmer’s office did not respond to a request for comment on the potash development funding, but the state environmental department confirmed the Michigan Potash & Salt Company has obtained required drilling and air quality permits.

The company may also need a wetland permit for construction,“but it’s possible the company is going to avoid impacts and will not need to apply,” said Jeff Johnston, a spokesperson for the Michigan Department of Environment, Great Lakes, and Energy.

The company’s initial water withdrawal registrations also expired Jan. 30, and if the firm has not already drilled those wells, it may have to register again, Johnson told Bridge Michigan. 

The proposed Michigan Potash wells will use “multiple strings” of steel pipes cemented to the surface that will prevent any fluids used for extraction from migrating into “freshwater zones,” Johnson said in an email. 

“Wells that meet design and operating requirements are very low risk,” he said. 

“There are redundant protections and strict guidelines related to well location, design, construction, operation, monitoring, testing, reporting, and closure. The safeguards in place ensure protection to freshwater, the environment, and human health.”

While some local residents have complained about the potential noise and environmental risk, the Michigan Potash & Salt Company is offering royalty payments to landowners who agree to lease mineral rights to the firm, which will allow for underground exploration and extraction. 

Roughly 450 families are in line to receive annual payments, which the company says will be about three times the average income in the region of $23,238 per capita and $46,969 per household. 

The project will have a "major" impact in Osceola and Mecosta counties, traditionally poor areas where median household income is $12,000 less than the state as a whole, according to William Knudson, a professor in the Department of Agricultural, Food, and Resource Economics at Michigan State University. 

In a February report, Knudson projected the potash operation would generate $1.8 billion in economic activity during construction, and $1.24 billion annually as it becomes one of the largest employers in the region. 

Michigan is in a unique position as "one of the few places in the world that has a commercial sized potash deposit," Knudson wrote. The Osceola facility, he said, could "produce more than 10 percent of the potash consumed in the U.S."