CORRECTED-Israel's LGC aims to mine phosphate off Namibian coast by 2018

Thu Mar 27, 2014 6:32am EDT

(Corrects March 25 story by deleting reference in paragraph five to LGC's marine diamond mining being in partnership with De Beers, and to show in paragraph six that $20 million investment covers demonstration plant)

PARIS, March 25 (Reuters) - Israel's Leviev Group (LGC) aims by 2018 to start mining fertiliser material phosphate off Namibia's coast after addressing concerns that led the country last year to announce an 18-month freeze on new environment permits for marine mines.

Deep-sea mining has attracted growing interest as technology has opened up new resources that could replace depleted land mines. But projects have stirred debate about environmental risks in the southwest African country and elsewhere.

LGC hopes a demonstration processing plant it plans to launch this year at the port of Luderitz will address such concerns and allow full-scale construction work to proceed so production can start in 2017 or 2018, Erez Mishal, vice president, business development and operations, said on Tuesday.

"This will help us to obtain the licence," he said on the sidelines of the CRU Phosphates 2014 conference.

LGC, which has gold and diamond mines and previously extracted diamonds from the seabed off Namibia, estimates it can mine about 2 million tonnes of phosphate rock a year at a depth of up to 300 metres below the sea in a deposit it evaluates at 2 billion tonnes.

After a self-financed $20 million investment in the demonstration plant, it would like to find an industry partner for the full development that would require a $800 million investment, Mishal said following a presentation.

Phosphate is one of three major crop nutrients, along with potash and nitrogen.

LGC is touting the project, which is being developed by its subsidiary LL Namibia Phosphates, as offering the lowest phosphate rock production costs in the world at a projected $16.61 a tonne, supported by an acid-based processing technique that reduces the need to remove impurities first from the rock.

This would be about half the $33 a tonne reported by Mosaic , the world's biggest maker of finished phosphate products, as its average phosphate rock mining cost last year.

There has been debate in recent years about the approach of so-called peak phosphate supply, after which output will decline, but LGC and technical partner EcoPhos say their process allows the use of low-grade rock that was not feasible before.

"We speak a lot about peak phosphates but it's the peak of high-grade phosphates," Yannick Vancoppenolle, process and product marketing manager at EcoPhos, said. (Reporting by Gus Trompiz; Editing by Anthony Barker and Dale Hudson)