A Review of Global Potash Deposits & Key Mining Companies
In modern times, the term Potash has become synonymous with potassium bearing salts. The mining of potash is fueled by the global agriculture industry as it is the key ingredient in fertilizer. Contemporary human development can even be partially attributed to the use of fertilizer due to its increase of agriculture production. However closely linked potash and fertilizer are to human survival, demand could soon exceed supply.
Potash salts are predominately used in fertilizer production. One statistic stated that 95% of all potash supply is dedicated to fertilizer production. And since there is a lack of an effective, abundant substitute for fertilizer, potash supply and growth are critical to increase global food output.
Exploration and discovery of new deposits is crucial in meeting future demand. Potash salts are currently extracted in about a dozen areas, but only a few are of a large scale. However, the long-term outlook remains bullish, especially in terms of mergers and acquisitions that could come from mid to large mining companies buying up smaller junior players.
Junior players who engage in micro-mining remain attractive towards investors for their exploration of undiscovered mines and future potential for new discoveries. However, it is quite common that junior miners who operate in South America in the Andes are extracting kalunite opposed to the highly sought after potash salt, potassium-chloride. Unfortunately, kalunite potassium alum remains an ineffective source for potash salts used for fertilizer. Nonetheless, the junior miners extracting kalunite are providing a valuable asset to their small communities, as well as providing a source of kalunite potassium alum for commercial uses other than fertilizer, like an ingredient in cosmetic formulations and medical supplies.
Just as potassium alum is not a suitable source for the desired potash salt, neither are all deposits located throughout the World. To generate the required type of potash salt for fertilizer a high density of brine is required. Small deposits are found in a number of regions, but only a few basins have had the right conditions to both form and preserve large potash deposits.
Sylvite, KCl, is the purest potash salt with a 52.5% K content, but it is relatively scarce. Potassium in fertilizer is usually expressed as potassium-oxide, K2O, which is 82% K by weight; sylvite equates to 63.2% K2O. The most common potash product is potassium-chloride and is chemically equivalent to sylvite. This is usually what a producer output will reference.
Canada
The Saskatchewan region of Canada is home to the largest potash basin in the World, supplying about 1/3 of the market. As the World’s largest and lowest cost potash producer, Potash Corp of Saskatchewan extracted 2 million tons of potassium-chloride from the region alone, and is expected to expand output to over 7 million tons by 2014. The company was presented with a hostile takeover valued at $39 billion, but shareholders refused, and the company went on record suggesting that the future for potash sales is so bright that the initial offer from BHP wasn’t worth taking seriously.
Other potash mining companies with a significant presence in Canada are the Mosaic Co that has a capacity of 11.7 million tons with plans to add 2.15 million tons by 2014, and Agrium Inc. which has a capacity of 2 million tons and will add about 500,000 tons by 2014.
BHP Billiton, Germany’s K+S KALI, and a number of other Canadian juniors are active in the potash rich Saskatchewan basin.
Russia
Russia is the second largest producer of potash behind Canada. The Upper Kama region in western Russia provides a very active potash basin and accounts for the majority of Russian mining. The two biggest players in the Russian market are Uralkali and Silvinit, which are likely to merge. Combined, they recorded more than double the output in 2010 at 4.1 million tons, but still remain below capacity.
Brownfield expansion in the former Soviet Union, one of the world’s top two producing regions, could add 3 million tons by 2014. And the main greenfield projects will not be online until 2017-18.
Uralkali plans to add 1.5 million tons of capacity in 2012 through “brownfield de-bottlenecking” of one of its mines. Eurochem, which is aiming to become Russia’s third biggest potash producer, is launching complex fertilizer production at the Gremyachinskoye potash mine, with 1.3 million tons of reserves, in 2013.
Belarus
The Starobin basin in Belarus is highly lucrative and large basin that is being mined by a state owned firm. Russia and Belarus have joint marketing arrangements and together represent another 1/3 of potash output.
Other Regions & Companies
There exist significant potash producers in other regions of the world other than those mentioned above, and some display room for expansion; regardless, none come close to reaching the scale potential of Saskatchewan or Russia/Belarus.
K+S KALI GmbH operates a series of German mines and recently acquired the Canadian junior Potash One. Other significant producers are Intrepid Potash mining in Utah and New Mexico and Vale SA in Brazil. The Israeli company ICL Fertilizers operates mines in the UK and Spain as well as solar evaporate operations in Israel.