Atlantic Potash Corp. has signed a two-year agreement to explore the Millstream potash deposit and explore other development opportunities in New Brunswick.

Premier David Alward and Natural Resources Minister Bruce Northrup made the mining announcement on Monday. The agreement comes after the provincial government embarked on an eight-month process to find a potential developer.

Alward said Atlantic Potash Corp. was one of two companies that responded to a request for proposals and it was selected through an open competition.

“The new agreement is for three years and provides the company with up to two years to undertake its exploration work,” Alward said.

“If exploration shows the deposit is economically viable, Atlantic Potash Corporation will be required to submit a feasibility study and proposed development plan by the end of the third year.”

The company will invest $4.5 million to explore the Millstream deposit and potentially explore other investment opportunities in New Brunswick.

Alward said there are still other details to be worked out with the company, but it's an exciting opportunity for the province.

"The Millstream potash deposit is the only remaining confirmed potash deposit in New Brunswick that has yet to be commercially developed,'' Alward said in a statement.

"If exploration by Atlantic Potash Corp. confirms this is an economically viable deposit, developing a new mine would mean hundreds of jobs and generate much-needed revenue to help pay for health care, education and other public services.''

Keith Attoe, the co-chief executive officer of Atlantic Potash Corp., said the company has met with many Sussex-area companies and groups in recent months to discuss the economic opportunities involved with developing the Millstream deposit.

“These are strong resources to build on and we look forward to working with the community, provincial agencies, regulatory bodies and officials as we continue to investigate New Brunswick's potash opportunity,” he said in a statement.

Attoe said the financing for the proposal is coming from China. One of the key investors is Guocai Liu, of Beijing, whose company Migao International operates seven potash processing facilities.

If the Millstream mine goes ahed, the Chinese financial investment could jump to more than $4 billion, said Attoe.

About half of the potash may be exported to China, he said.

The New Brunswick government is already benefiting from the expansion of the potash industry.

Potash Corporation of Saskatchewan announced a $1.67-billion plan in 2007 to build a two-million-tonne mine.

There are 330 people working at the potash mine and another 140 full-time jobs will be created when the new mine opens in 2012.

The premier said an expansion of the potash industry could give a serious jolt to the New Brunswick economy.

“Given the strong demand and prices for potash today, we see real potential for a viable development here. That would mean hundreds of new jobs for people right here in Sussex and the surrounding area,” Alward said in a statement.

“It would also mean new revenues for the province.”

‘It’s quite exciting’

The addition of another potash mine in southern New Brunswick has local politicians very excited about the potential economic opportunities.

Sussex Mayor Ralph Carr is optimistic a new mine will be built, providing economic spinoffs for the area. (CBC)"It's quite exciting," said Sussex Mayor Ralph Carr, who is optimistic a new mine will be built after meeting with officials from one of two companies that were in the running.

"I was under the impression they'd be able to start [digging and building] within 18 months to two years," which would provide a significant economic boost for the area, he said.

The other interested company was based in Germany, said Carr.

He said the successful company will first have to get an environmental impact assessment, then do more testing to see how big the potash deposit is.

"They're looking for 40 years of potash. I understand they're currently looking at around 25," said Carr.

"I think they're ready to go, no matter which way, but they're looking for more."

Carr said he does have concerns about the possible environmental impact of another mine, given the water problems residents in Penobsquis attribute to the mine there.

Farm owner Cynthia McEwen alleges her drinking water was contaminated by existing potash operations. "I think they should fix the existing problem before they start something else," she said.

The mayor said he doesn't want growth at any cost, but potash has been a huge boon to the area. There are currently 412 jobs at the existing mine, Carr said.

Demand, prices up

The area in question, located between the Parleeville Road and Highway 121 near Apohaqui, was previously explored by British Petroleum Resources Canada in the 1980s and by International Minerals and Chemicals in the mid-1990s.

About 256 million tonnes of potash was discovered, but the deposit was considered relatively small compared to other areas, such as Cassidy Lake and Penobsquis, which have since been developed.

The known deposit was also considered complex for the mining technology of the day due to the other minerals present, but the technology has changed considerably.

Meanwhile, the demand for potash, which is used in fertilizer and agriculture products, has jumped, along with the price.

The mayor said existing infrastructure, such as railway lines and the nearby Saint John port, make a new mine "very feasible, very economical."

He expects it will have a huge impact on the local economy.

"What it means is that people who are looking to come here, business wise, and question the size and availability of people, customers, this will really encourage them to come here and build because we're talking between 300 and 400 new jobs, permanent jobs," he said.

The number of house building permits has already jumped, motels and bed and breakfasts will be "full for the next seven years" and restaurants will be hopping, Carr said.