As in 2013 and 2014, potash continued to be the volatile
focal point of the agriminerals markets, while the phosphate
industry remained relatively stable.
Heading into 2014, the implications of the flooding of
Uralkali OAO’s Solikamsk II mine in Russia were
among the chief supply concerns facing the potash industry.
Solikamsk II represented a fifth of Uralkali’s
capacity, and, by the end of 2015, the company had not been
able to recover the mine, having pulled equipment out of the
site in February.
Israel Chemicals Ltd (ICL) saw production across its potash
and bromine arms disrupted by industrial action in Israel for
much of H1, which eventually led the company to further invest
in its potash interests in Spain and purchase Allana Potash
Ltd, the Canadian developer of the Danakil sulphate of potash
project in Ethiopia. The strike action was attributed to the
publication of the Sheshinski Committee II extractives industry
tax review findings, which were eventually implemented in late
November. ICL claimed that the financial burden of the new tax
regime would result in the "most extreme" business environment
and taxation in the extractive industries worldwide, leading it
to implement job cuts and reduce investments in
Also making the headlines for negative reasons in 2015 was
Sociedad Quimica y Minera (SQM). Its CEO, Patricio Contesse,
was ousted following a number of revelations about the
company’s business dealings in 2014 and 2015.
SQM’s potash operations remain relatively stable,
but ructions over the company’s lithium and iodine
businesses posed question marks over its medium-term cash
In April, Highfield Resources Ltd released a positive
definitive feasibility study for its low production cost Muga
project in Spain. Highfield has a finance facility organised
with a syndicate of banks, which was awaiting approval at the
end of 2015.
Possibly the biggest story of the year was the attempted
takeover of Germany’s K+S AG by
Canada’s Potash Corp. of Saskatchewan Inc.
(PotashCorp). Delivered to K+S executives in June 2015,
PotashCorp initially offered a €41/share ($45.19/share*)
deal. This was rejected by the German company’s
management in July. PotashCorp withdrew its bid in October
after repeated attempts to woo the company, stating that market
conditions for the purchase had deteriorated, despite saying
only weeks before that the deal was even more attractive than
when it was originally proposed.
Sirius Minerals Plc saw its polyhalite mine approved in
northeast England over the summer and began seeking funding to
advance the project.
In Brazil, Vale SA put its Kronau project on ice in late
2015, noting financing difficulties for large capital projects
in tough market conditions. BHP Billiton, whose work on the
Jansen project in Canada continues at a snail’s
pace, saw 76 job cuts in early December, though the company
claims that this will not affect the development of the
project. Macquarie forecasted that potash prices of $400/tonne
would be required to yield an acceptable rate of return, rising
to $500/tonne to be effective at attracting capital investment
over the company’s other projects.
Meanwhile, the phosphate market rumbled on quietly
throughout 2015. The largest supply disruption occurred in
Tunisia, where ongoing political instability and protests by
locals reduced production rates at Compagnie des Phosphates de
Gafsa (CPG) to 6m tonnes, down from over 8m tonnes in 2010.
In New Zealand, Chatham Rock Phosphate Ltd (CRP) was
disappointed by the Environmental Protection
Authority’s (EPA) decision to reject its
application for marine consent, a requirement for mining the
offshore Chatham Rise phosphate deposit. The company flagged
its intention to pursue the EPA for alleged irregularities in
its expenses charged to CRP and, at the end of 2015, was
working towards a reverse takeover of Antipodes Gold, a
TSX-listed company, in order to raise money.
With much of the world’s phosphate reserves
based in the Middle East and North Africa, the Islamic State of
Iraq and the Levant (ISIL), also known as Daesh and ISIS, was
believed to have disrupted phosphate supplies in both Syria and
Iraq in 2015, though this was not thought to be connected to
the manufacturing of fertiliser bombs.
Potash demand was generally agreed to be lower in 2015 than
it had been the previous year, primarily owing to lower crop
prices caused by consecutive record yields, in turn caused by
favourable growing conditions in key producing regions.
In Brazil, purchasing weakened on the back of a depreciating
currency, increasing relative prices by tens of percent. In
China, the introduction of VAT may reduce demand in the medium
term, analysts said.
PotashCorp said it expected total demand volumes of 58-60m
tonnes for 2015, with actual volumes likely to be towards the
lower end of this range.
For phosphate, the Mosaic Co. said it estimated total 2015
shipments of 65-65m tonnes.
Potash prices, which held firm for most of the year,
declined in the second half by around $10/tonne, as the market
realities of oversupply once again took their toll on the
For phosphate rock, prices firmed in 2015, rising by around
$10/tonne. PotashCorp noted in a report published towards the
end of the year that Indian farmers had adjusted to market
deregulation and that demand for the mineral was up.
The outlook for potash is defined by overcapacity. The
decline of the Russian and Belarussian rouble, and the Canadian
dollar, is likely to sustain high-cost production in the medium
term, however much depends on crop growing seasons and yields,
which can be suddenly and severely impacted by weather
For phosphates, supply is equally secure, though industry
observers have warned that instability in the Middle East and
North Africa regions should be considered a low-likelihood but
high-potential impact source of supply insecurity in the medium
*Conversion made December 2015