The City of Regina is considering selling treated wastewater to a potash mine in a deal valued at $80 million, according to a report going to council members next week.
The proposed deal, with a company called Western Potash Corp., would see water from the city's treatment plant piped to a mining operation near Gray, Sask., about 35 kilometres south of Regina.
In their report, city officials said there was minimum financial risk to Regina under the deal.
Regina has never sold treated wastewater. Officials have hired a consultant to provide advice on what to charge.
The proposal would see some 60,000 cubic metres of water, per day, delivered to the mine in the first six years, dropping to around 42,000 cubic metres per day for the remaining years of a 45-year contract.
The mine operators were given three options for how to pay for the water:
- Pay an annual fee, based on water delivered in each year, estimated at $5.6 million per year for the first six years and $5 million per year for the next 39 years.
- Pay a one-time fee of $80 million in 2012.
- Pay a lump-sum fee in one or two installments, with the company choosing when to pay. (With this option, the city could be paid as early as 2013 or as late as 2019.)
No matter how the company chooses to pay, the city estimates the present-day value of the deal is $80 million.
The report notes that the mine is still in the development stages and the company may choose not to buy any water.
However, the city would require a commitment fee of $500,000, which would be credited to the company if it actually starts to take water.
While the company would be required to build the infrastructure needed to deliver the water, the city would do the operation and maintenance work, for another fee, set at actual costs plus 17 per cent for overhead.
The suggested contract is on the agenda for an upcoming meeting of city council members, meeting in executive committee, on Wednesday.
Typically, potash mines use water as a way to dissolve the mineral and bring it to the surface for further processing.