It will become the latest project to tap into the WA gas market to lower costs for a remote mining operation, following the likes of Gold Fields and Gold Road Resources' Yamarna gold project.

 

By using gas over diesel Kalium Lakes expects to save around $31-34 per tonne from the production figures in its recently completed bankable feasibility study.

 

While construction of the pipeline will add $29 million to the costs of the A$159 million stage one development, the company sees the savings for the East Pilbara development's first stage, which is set to produce 82,000 tonnes per annum of the fertiliser.

 

Stage 2 will increase production to 164,000tpa, and gas demand, at a cost of $125 million.

 

"The grant of this licence confirms that we now have the flexibility to include the gas pipeline in the mix of construction variables, in order to optimise the best configuration of the processing plant," Kalium Lakes managing director Brett Hazelden said.

 

A gas sales agreement is yet to be announced, but the company previously said fuel for phase one's seven megawatt plant could be sourced initially from LNG supplied by road train, with the pipeline not required until stage 2.

 

It has already commenced discussions with APA Group to confirm tie in and pipeline extension requirements and costs.

 

At the moment, Kalium is expected to construct and operate the pipeline, although it could seek a third party operator for its power plant. 

 

Funding for the project could partially come from the Commonwealth's $5 billion Northern Australia Infrastructure Facility, and the company is working with NAIF on due diligence investigations. 

 

Kalium is looking to make a final investment decision in the first quarter of 2019 with production slated for 2020. Mine life could be as much as 50 years.