In the last two years, phosphate
has become the poor relation to potash. Having been the primary
fertiliser raw material for many years, attention from the
worlds biggest miners and investment banks has, in the
main, turned from phosphate to potash.
This is not to say the phosphate
industry does not hold promise quite the opposite in
Phosphate is the primary fertiliser
mineral. It is far and away the most widely consumed as
phosphoric acid in a number of downstream fertilisers and as a
direct granular additive.
The figures speak for themselves:
global production is 174.4m. tpa compared with 61.2m. tpa for
potash while expansion activity is on a par with the burgeoning
The phosphate industry is expereicing a significant lull
demand however Europes only miner, Yara, has taken
opportunity to improve processing at its new Finland mine
upping production to 1m. tpa. Courtesy Yara International
One of the more unattractive traits
prevalent with phosphate, however, is price volatility which
has come to the fore following a dramatic demand downturn in
2009. Whereas potash has bucked the price plummeting trend
holding at around two thirds that of 2008 levels ($800/tonne to
$450-600/tonne), phosphates value has headed further
Phosphate rock is now worth around
$90/tonne when last year it was trading between
The reason behind this price
volatility comes down to the relatively high number of those
mining phosphate which makes it more difficult to keep prices
high in times of almost non-existent demand such as now. It is
something that has characterised the industry over the last
The demand slump is such that the
International Fertilizer Association (IFA) told
IM it expects this years production to
be much lower than 2008s afore mentioned
Despite this, the industry has
attracted some major mining houses of late such as Vale SA, the
worlds second largest miner, and Saudi Arabian Mining Co.
(Maaden), the largest miner in the Kingdom which has
decided to make phosphate a cornerstone focus along with gold
In what may come as a surprise to
some, China only emerged as the worlds leading phosphate
rock producer as recently as 2007 when it overtook the USA. But
since, it has mined phosphate at such a rate that it now
produces nearly double that of the US industry.
The countrys present output
was approaching 50m. tpa for 2008 with the bulk of product
mined from the Hubei, Yunnan, and Guizhou provinces with
Sichuan emerging more recently as a significant phosphate
producing area. This figure, however, is expected to be
slightly down for 2009.
Much of Chinas phosphate
industry has undergone substantial consolidation in the last
three years allowing the government to closely control
One of Chinas leading
phosphate miners is Guizhou Kailin Co Ltd which operates its
new 1.5m. tpa phosphate mine in Kaiyang area of Guizhou
province. The group is expected to expand output in the coming
years through production from the Kaiyang Phosphorus Coal
Chemical Ecological Park development which should yield 4m. tpa
phosphate ore from a new mine. Construction of the mine is
scheduled to begin next year.
The government induced activity has
given rise to a number of new fertiliser giants which mine
phosphate as only a fraction of overall activities. The leading
fertiliser producer in China, and third in the world, is
Kumming, Yunnan based Yunnan Yuntianhua International Chemical
Co. Ltd which was born from consolidation of five
Other major phosphate producing
regions include: the Kunyang deposit in Yunnan, the Chaoyang
deposit in Jiangxi, the Hubei phosphate districts of
Jingzhou-Xiangyang and Yichang in Hubei; and, Guizhous
phosphate deposits, Kaiyang and Wengan.
Sichuans phosphate mining,
which comprises of over 100 small to medium companies, was
significantly disrupted by last years earthquake. The
Richter Scale magnitude 8 quake devastated a 1m. tpa phosphate
rock mine and two DAP fertiliser plants.
China has not been immune to the
global downturn either. As a measure to encourage industry
activity, Chinas Ministry of Trade lifted export tariffs
on phosphate rock and phosphoric acid as of 1 July 2009.
Phosphate rock is seen as a scarce
resource for China. Despite hosting reserves of 2,700m. tonnes,
this is thought to be barely enough to maintain the
countrys demand for the next 70 years (
IM 23 June 2009: China cancels phosphate tariffs).
While 70 years may suffice for some, not for China - yet
another example of the countrys forward thinking.
Compared with many other
commodities, China has been slow on securing fertiliser
minerals which may come as a surprise considering the pressures
of feeding its huge and rapidly growing population.
While China has only recently
recognised the need to increase efficiency in the fertiliser
sector resulting in consolidation establishing new
phosphate mining projects has only taken hold over the last 5-8
years. Potash in China is still years behind phosphate in terms
of production and new projects.
Over the next decade, security of
all fertiliser minerals will be high on Chinas priority
Despite being knocked off the
production top spot by China, the USA still produces 30m. tpa
of phosphate ore and is the worlds biggest consumer of
The USA is home to the worlds
largest phosphate miners: The Mosaic Co. (10-11m. tpa), Potash
Corp. of Saskatchewan (9-10m. tpa), JR Simplot Co. (6m. tpa),
CF Industries Inc. (3.5m tpa), Agrium Inc. (Nu-West Industries,
Inc, 1m. tpa), and Monasato Co. (P4 Production, LLC, <1m.
tpa) (see Global phosphate rock production
The vast bulk of US phosphate
production is from Florida and North Carolina which account for
85% of output. Utah and Idaho contribute the remaining 15%
Florida operates seven phosphate
mines: five by The Mosaic Co., one by PotashCorp and one by CF
Global phosphate exploration
activity has been closely linked to the depleting resources at
Floridas existing mines which have historically been the
leading source of world supply. According to Americas phosphate
consultant John Sinden, companies are looking outside of the
country for resources that are easier to obtain licences
There is a basic long term
interest in global phosphate exploration because several of the
mines in Florida are close to being exhausted, explained
Sinden, licenses for new mines are very difficult to get
[because you need clearance from the] Federal Environment
Protection Agency (EPA) and the state EPA.
Phosphates importance to
Idaho also cannot not be underestimated; the state is home to
three mines operated by Agrium, JR Simplot and Monasato.
Jack Lyman, executive vice
president, Idaho Mining Association told IM:
Phosphate represents the largest value of all the
minerals produced in Idaho. Molybdenum will sometimes show a
greater value in published reports but that is because the
value listed by USGS for phosphate is of the ore only, not the
value added by additional processing done in Idaho.
When that value is included,
phosphate is far and away the most valuable mineral produced
and processed in Idaho, he added.
JR Simplot and Agrium are in the
process of planning a new open pit phosphate mine in Idaho.
A slow year
It has definitely been slower
this year, explained JR Simplot Co. phosphate miner and
supplier to the USAs west and mid-west regions.
Fall has been a little slower
than expected, Martin Hunt, vice president of mining at
US Phosphate producer JR Simplot Co. told IM,
weather conditions in the Mid-West have been wet and the
farmers havent had a chance to lay fertilisers
This slow trade in the USA has been
defined by production cuts lead by Mosaic which slashed
production in the summer by 2.2m. tpa. This was followed by a
further cut of 500,000-1m. tpa in October 2009 in a move that
is hoped to better balance inventory levels and supply
chain demands according to the company.
The fertilising season for the
USAs agriculture sector is between September to mid
November and period following winter late-February to April and
Simplot remains optimistic for a pick-up in demand come spring
Battle for fertiliser
An acquisition battle between
Agrium Inc. and CF Industries Inc. has been the subject of much
talk in 2009 in North America.
As demand continues to plummet,
attentions were turned to Agriums takeover bid for CF
Industries which gripped the interest of the fertiliser
industry and financial houses alike.
The take-over is yet to
materialise, however, and recently took an interesting
In October, nitrogen fertiliser
producer Terra Industries entered the fray after agreeing to
purchase 50% of the Carseland nitrogen plant owned by Agrium.
This is thought to serve two purposes: to block an unsolicited
takeover bid for Terra from CF; and, to clear antitrust
regulations that have threatened to scupper any Agrium/CF
The battle to be the next
fertiliser behemoth is set to rumble into 2010.
North Africa is the hub of
international exports of phosphate rock because both the USA
and China predominately consumer their product domestically.
Its substantial role in industry is highlighted by the fact
that in 2008 Morocco, Tunisia, Egypt, Jordan, and Syria
contributed to 80% of international trade.
In addition, Saudi Arabia will soon
significantly boost production in the region once
Maadens 12m. tpa mine is operational next year
(see Focus on Maaden).
Morocco is by far the leading
producer in Africa and the Middle East with a 24-30,000 tpa
output in 2008 only bettered by China and the USA.
The north-west African country is
home Office Cherifien des Phosphates (OCP) which accounts for
virtually all phosphate extraction in the country, except for a
few bespoke miners.
OCP operates four major mining
areas Khouribga, Ben Guerir, Boucraa Laayoune, and
Youssoufia and six mines totalling 25.7m. tpa phosphate
The vast majority of ore is used
internally at OCPs two fertiliser complexes, Safi and
Jorf Lasfar, which both contribute to an overall fertiliser
output of 4m. tpa the second biggest in the world sandwiched
between The Mosaic Co. of the USA which has a 9m. tpa capacity
and Russias PhosAgro AG third with 3m.tpa.
Safi produces over 1.5m. tpa
phosphoric acid, 500,000 tpa TSP, 250,000 tpa NPK, and 400,000
tpa MAP. Jorf Lasfar, located on the Moroccan east-coast,
outputs 2m. tpa phosphoric acid from 7m. tpa ore mainly
supplied by the Khouribga mines.
Khouribga which operates the
worlds biggest open pit phosphate mine will soon be home
to three new mines bringing the total to six in the area. The
initial phosphate capacity will be raised by 17.5m. tpa,
bringing Khouribga production to 36.5m. tpa. The openings of
all three mines will be staggered between 2012 and 2016.
OCP will also open a mine in south
Ben Guerir in 2014, producing 3m. tpa (
IM February 2009,p.6: OCP phosphates hub).
Should all plans go accordingly,
OCP will be mining 45-50m. tpa phosphate from 2016
onwards an astonishing figure which matches todays
total Chinese output.
In another positive development for
Morocco, fertiliser giant Bunge Ltd has founded the government
j-v, Bunge Maroc Phosphore which is set to produce 375,000 tpa
Leading integrated phosphate fertiliser producers
Tunisias 7-8m. tpa output is
courtesy of state miner Compagnie des Phosphates de Gafsa (CPG)
which operates ten mines and produces TSP, DAP, nitrate
fertiliser, and phosphoric acid through subsidiary Groupe
The operations came about through a
government forced merger in the mid-1990s to capitalise on the
value of phosphate ore beneficiation rather than just exporting
the raw material.
GCT has recently struck a j-v with
Indias Gujarat Fertilizer to establish a 330,000 tpa
phosphoric acid plant under the new company Tunisian Indian
Meanwhile, Tunisia is looking to
establish a new phosphate operation in Sra Ouertane from which
Indias National Mineral Development Co. pulled out of in
October 2009. Sra Ouertane has estimated reserves of 1,000m.
tonnes of phosphate ore and is the countrys second
Indias Rashtriya Chemicals
and Fertilizers Ltd is the latest to show interest in a deal
which is estimated to top $4,000m. Brazilian mining outfit Vale
SA have also been linked with the deposit.
Is demand for phosphate recession proof?
Jordan, Syria, Egypt
Jordan Phosphate Mines Co. is the
countrys only phosphate miner contributing 4-6m. tpa to
the industry from its Al-Abiad, the Al-Hassa, and the Eshidiya
mines. This feeds the countrys phosphate fertiliser
production is presently just shy of 1m. tpa while production of
phosphoric acid is roughly half of this.
Phosphate is one of Jordans
biggest businesses together with potash, nitrates and petroleum
Similar to Jordan, phosphate
production is the biggest industry by value for Syria. The
country mines just under 4m. tpa through government run General
Company for Phosphates and Mines through the Ash Sharqiya and
the Khunayfis mines.
Infrastructure issues are presently
hampering expansion of Syrias phosphate industry which
could feasibly double production in a short space of time
should the rail link between the Homs governorates and Tartous
port be upgraded.
Unlike Jordan and Syria, the
fortunes of Egypts phosphate industry are not closely
tied to oil and gas sector. El Nasr Mining Co. is the
countrys largest producer with an output of 1m. tpa.
Although the US Geological Survey (USGS) estimates phosphate
rock output from Egypt to be close to 3.5m. tpa, this figure is
expected to be much lower for 2009.
PhosAgro controls phosphate ore
mining and fertiliser production in Russia.
The state-owed group has been
mining the Khibiny apatite-nepheline deposits through OJSC
Apatit for the last 75 years in the town of Apatity in Murmansk
oblast, north-west Russia.
Its phosphate ore is processed at
another subsidiary LLC Balakovskyie Mineralnyie Udobrenia (BMU)
which produces MAP, DAP, and NPK fertilisers among others. The
group has a total fertiliser production capacity of 2.4m. tpa,
the fourth largest integrated producer in the world.
OJSC Kovdorsky Mining and
Processing Factory is Russias other miner of phosphate
Medium producers by
Bunge Fertilizantes Fostatados SA
(4-5.5m. tpa) and Copebras (2.2m. tpa) are the only producers
of phosphate in Brazil.
Bunge also produces 2.2m. tpa of
SSP nearly a third of Brazils output
6.2m. through its fertiliser subsidiary, Bunge
Fertilizantes, together with 600,000 tpa DCP, nearly half of
Brazils total production.
Smaller phosphate tonnages also
come from Venezuela (around 200,000 tpa and dwindling), and
minor tonnages, under 40,000 tpa, produced from Columbia, Chile
and Peru for local markets.
But Perus phosphate industry
is about to be transformed by the huge $479m. investment by
Vale SA into the Bayvar deposit which will become one of
the worlds biggest mines in three years with a 7.9m. tpa
capacity (see Focus on Vales Bayvar
This will take Peru from phosphate
obscurity into one of the worlds significant producers,
but also double the capacity of the continent which is
well known for being one of the largest consumers of
In South East Asia, Vietnam is one
of the leading phosphate producing countries after it more than
doubled production of the phosphorous bearing group of
minerals, apatite from 1m. tpa in 2005 to 2.5m. tpa in 2008.
Apatite expansions are continuing particularly with the North
Nhac Son project of the Lao Cai apatite mine which will see its
capacity rise from 2m. tpa to 4.5m. tpa next year.
Fertiliser production in Vietnam
reached 2.650m. tonnes in 2008 and is one of the countrys
major industries along with petrochemicals. The country has
nearly 300 operational fertiliser plants producing nearly 1m.
tpa SSP and 4.2m. tpa of NPK.
Dinh Vu DAP fertiliser plant in Hai
Phong City is the receiver of most of the ore for its new
330,000 tpa DPA production, which has began to produce in March
2009 and requires 600,000 tpa apatite ore at 33%
Despite its substantial fertiliser
production, Vietnam is still a net importer particularly of
Yara International is Europes
only phosphate miner following the acquisition of the
Siilinjarvi mine in Finland from Kemira Oyj is 2008.
The Norway based agricultural
chemicals producer is expanding capacity at the mine from
850,000 to 1m. tpa through processing improvements which will
be compete by the end of the year. The mine supplies the feed
for the groups fertiliser production.
Around half of Yaras
phosphate is for NPK production while the other 50% will supply
direct phosphate fertilisers. While it sells 60% of its product
to Europe, 20% to the Middle East and 20% to the USA.
The 150,000 tonne expansion at the
mine will replace purchased phosphate tonnages.
Europe is Yaras major market
for NPK and phosphate feed whereas Asia is the second biggest
consumer of its NPK.
As is the case for most, Yara has
felt the demand pinch. The groups NPK sales are lower
this year than 2008 as potash producers a key component in the
product are holding back demand with high
Phosphate deliveries have
been substantially down from last autumn, Torgeir Kvidal,
Yaras head of investor relations explained to
IM, they have lately picked up
In comparison to the potash market,
phosphate has been more realistically priced,
Kvidal believes this is already reaping some rewards over its
In contrast to potash, the
phosphate prices more reflect a competitive and still slightly
oversupplied market since demand has not fully picked up, while
potash demand is still hampered by historical high prices
[enforced] by producers holding back on sales, he
Outside of the main production
hubs, Australias phosphate resources have been the
subject of much speculation and activity in the last year.
There are a number of companies looking to add to Incitec
Pivots phosphate production in North West Queensland.
Projects in the region include:
Minemakers Ltd looking to exploit Australias largest
undeveloped phosphate rock deposit in Wonarah; Legend
Internationals Holdings Inc. at the Lady Annie deposit in north
Queensland; and Ravensdown Fertiliser Co-operative Ltd in south
In Sub-Sahara Africa, Mali is one
of the more promising areas with Oklo Uranium Ltd and Great
Quest Metal Ltd exploring the countrys phosphate
potential. Meanwhile, Minemakers is also looking at mining
seabed phosphate sediments off the coast of Namibia.
Does the lack of fertiliser
purchasing mean food is not being produced?
Of course fertiliser is a crop
enhancer and not a necessity. However if farmers choose to
forego fertiliser application, resulting yields are
significantly smaller and the soil rapidly becomes
malnourished but crops are still produced. This
has been the story of the year so far.
As fertiliser mineral
prices in particular potash remain high farmers will
not want to purchase fertiliser. It is a product of simple
economics that has been compounded by the drying up of much
The soil does build up some credits
of nutrients for example potash is held in the subsurface
for longer than nitrogen and phosphate. However, many analysts
believe that stocks of nutrients held in the soil have expired
thus the stand off between mineral producers and users cannot
last for much longer.
European phosphate producer, Yara
International, like many producers in the industry, remains
Farmers can not continue to
cut fertiliser application for the long-term without
substantial negative effects on yields. The difficult question
is for how long they can continue to cut, Torgeir Kvidal
explained to IM.
This will depend on grain
prices, fertiliser prices and the yield effects expected by the
farmers, he added.
This is a point that Michel
PrudHomme of the IFA echoed.
It is unlikely famers have
any stocks left, PrudHomme explained to
IM, stocks at end users decreased
massively in 2009, the pipeline distribution has dried up and
[as a result] just in time deliveries and hand-to-mouth sales
Harvests have used the
available nutrient reserves in soil and received adequate
yields this year, but this negative balance cannot sustain crop
yield and quality, he added.
The severity of the present
situation is unprecedented and trying to forecast or predict
industry trends for the short to mid term is a dangerous game,
but long term demand is all but assured.
US producer Mosaic probably said it best: Recessions
do not make people less hungry.
Phosphate rock at a glance
Phosphate rock (27-35%
P2O5) is the feedstock for phosphate
fertilisers and phosphoric acid, with small supply as slag from
the steel industry (10-20% P2O5).
The ore is processed into
fertiliser using acid: sulphuric acid produces MAP, DAP, SSP
and complex fertilisers; phosphoric acid results in TSP; and
nitric acid produces a slurry NP for use as a feed in complex
2008: 174.4m. tpa
Production hotspots (% global output): China
(29%), USA (18.5%), Morocco (16.7%), Russia (6.5%)
Phosphate uses: Fertilisers* 85-90%,
*incl. phosphoric acid
** Including: industrial uses (chemical reagent, electro
polishing, catalyst); medical uses (Pharmaceuticals, water
treatment, dental); and, retail uses (soap, carbonated drinks,
|Direct phosphate fetilisers
|MAP (Monoammonium phosphate)
|DAP (Diammonium phosphate)
|SSP (Single superphosphate)
|TSP (Triple superphosphate)
|Complex phosphate fertilisers
World phosphate rock capacity (m. tonnes)
World fertiliser consumption (m. tonnes)
Phosphate progress in Saudi Arabia
Focus on Maaden
Project name: Al Jalamid (mine) and Ras Az Zawr (fertiliser
Developer: a 70:30 j-v between Maaden Phosphate Co. and
Saudi Basic Industries Corp. (SABIC)
Holding companies: Saudi Arabian Mining Co. (Maaden) and
Mission: development of the Al
Jalamid phosphate deposit into a 12m. tpa mine translating to
5m. tpa dry flotation concentrate; and, establishing Ras Az
Zawr plant as a 3.6m. tpa fertiliser processing facility.
Arabia: Al Jalamid (central-north), and Ras Az Zawr Eastern
province (north-east coast)
Maaden is looking to extract 233m. tonnes of the 534m.
tonne resource. Supporting infrastructure will include: power
plant, potable water production, treatment and distribution,
roads and telecommunications. The Al Jalamid mine and
beneficiation plant will span 50km².
phosphate concentrate from Al Jalamid will be transported by
rail to Ras Az Zawr for processing into DAP and phosphoric
acid. Maaden expects to produce 3m. tpa granular DAP,
400,000 tpa ammonia, and 200,000 tonnes excess phosphoric acid
for sales to the domestic market.
in September 2009 83% of the project was complete
target: H1 2011
Development budget: $3,500m.
Phosphate progress in
Focus on Vales Bayvar development
Developer: Vale SA
Mission: development of Bayvar phosphate
deposit into a initial 3.9m. tpa mine
Location: Piura, north Peru
construction of 3.9m. tpa mine and a phosphate concentrating
plant, a 40 km access road, a 5 km overland conveyor, a drying
and storage area, and a port with capacity to ship 7.9m.
Phase two: to ramp
operations up to 7.3m. tpa
date: H2 2010
Development budget: $479m.
Prices: phosphate v potash
One of the most effective ways to
analyse phosphate pricing is to compare it to its potassium
counterpart, potash. They share the same end market but exhibit
quite differing trends when it comes to pricing.
Owing to the comparative abundance
of producers, phosphates price is more volatile. Potash
is produced from a handful of miners in Canada and Europe which
can tightly control the supply lines to the market if
demand drops, production is cut and less available potash,
together with the bullish attitude of producers, keeps prices
Phosphate does not have this
luxury. When demand falls as in 2009, the price goes with it.
Phosphate fell from 350-400/tonne at peak times in 2008 to
$90/tonne now. Potash has fallen from $800/tonne to
$450-550/tonne in the same period. Demand patterns for both are
very similar, but the price difference is stark.
The potash industry tends to hold its prices at a
higher benchmark than phosphate producers, explained one
North America phosphate producer.
Benchmark prices since
rock production highlights
|JR Simplot Co.
||Processed at Pocatello Idaho
|JR Simplot Co.
||Processed in Wyoming
||Beaufort, North Carolina
||Output was 4m. In 2008
||Output was 3m. In 2008
|The Mosaic Co.
||10m. (all US mines)
|The Mosaic Co.
||10m. (all US mines)
|The Mosaic Co.
||10m. (all US mines)
|The Mosaic Co.
||South Fort Meade
||10m. (all US mines)
|The Mosaic Co.
||10m. (all US mines)
|* Operated by Nu-West Industries
|** Operated by PCS Phosphate Co.
||120km south Casablanca
||3 open pit mines; expansion to 24.5m. underway with 3
||40 miles north Marrakesh
||1 open pit mine and the newest of OCPs
operations; expansion to 4.5m. tpa underway
||50km south-east Laayoune
||1 open pit mine
||230km from Casablanca
||1 open pit mine
|Phosphates de Gafsa
||Araxá, Minas Gerais
||Feeds two SSP plants onsite and one SSP plant in
Cubatão, Guará, and Uberaba
||Tapira, Minas Gerais
||15m. (total ore not just phosphate)
||7m. (total ore not just
||Pastos de Minas, Minas Gerais
||478006 (total ore not just
|Jordan Phosphate Mines Co.
||Al-Abiad, Al Hassa & Eshidiya
||Feeds 1m. tpa phosphate fertiliser production
|General Co. for Phosphates & Mines
||Ash Sharqiya & Khunayfis
|Rotem Amfert Nagev Ltd (ICL
|El Nasar Mining Co.
||Limpopo province, South Africa
||2009 Production: 2.4m.and 659,000 P2O5)
||Expansion from 850,000 which began December 2008
||100km from Dakar
||Feeds two phosphoric acid plants in Darou near the