On 24 April this year, the world’s population
was estimated to have hit 7.5bn. The number of humans on the
planet has increased sevenfold in a matter of decades, a trend
which, according to the United Nations (UN), has been driven
largely by increasing numbers of people surviving to
reproductive age, changes in fertility rates, increasing
urbanisation and accelerating migration.
The global population is set to continue growing, albeit at
a slower rate than in the last 50 years, to peak somewhere
between 8.8bn and 10.8bn people by 2050.
Recent growth has been largely concentrated in Asia, which is
now home to around 4.6bn people and the continent is expected
to continue to have the fastest growing population for the
foreseeable future, with over half of all 10 year olds now
living in Asia and the Pacific.
With population growth comes increased demand for food.
According to the UN’s 2016 "Food & Agriculture
Organization" report, demand for meat, fish and dairy products
will see the strongest expansion rates to 2025. This in turn
will boost the need for coarse grains, such as corn and soya
beans.
World population by world
regions |
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Source: HYDE Global population by region |
Anglo-Australian miner BHP Billiton, the
world’s largest mining company by market
capitalisation, is considering how it can take advantage of the
rising need for food, forecasting that global crop demand will
grow by 50% between now and 2050.
In order to maximise yields from ever-shrinking areas of
productive land, nutrients in soils have to be regularly
bolstered and replenished by adding fertilisers. There are
various kinds of fertiliser, including compounds, organics,
elemental fertilisers, nitrogen, phosphate and potassium
(potash) fertilisers.
Potash, a term used to describe various salts that contain
water-soluble potassium, is one of the major mineral
fertilisers targeted by mining companies.
BHP has blown hot and cold on its potash mining plans, as
prices for the mineral have fluctuated. The company owns the
Jansen potash project in Saskatchewan, Canada and according to
its current strategy, plans to begin mining at the site between
2020 and 2023. Once completed, Jansen is slated to have a
capacity of 10m tpa potash for up to 50 years, providing BHP
with "long-term growth and diversification benefits".
However, it has not been an easy period for the fertiliser
industry.
"2016 was clearly a challenging year for the fertilizer
industry, due to a combination of factors, including lower
pricing, volatile energy pricing and uneven global nutrient
demand," a spokesperson from EuroChem told
IM.
"Agriculture commodity prices started the year depressed
from another bumper crop and a stream of new fertiliser supply
came to the market, outpacing demand and pressuring fertiliser
prices further. So far this year, we see continued pricing
pressure but predict a more encouraging environment emerging
from next year as the market begins to rebalance," EuroChem
added.
The International Fertilizer Association predicts modest
growth in nutrient fertilisers of about 1.4% a year up to
2021.
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Float with ArrMaz collector: Mineral laden froth
paddled off
flotation equipment.
ArrMazz |
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ArrMazz lab testing of new flotation
collectors.
ArrMazz |
Potash
If and when BHP enters the roughly 64m tpa global potash
market, it will face stiff competition from incumbent
producers. Canada’s Potash Corp of Saskatchewan
(PotashCorp) and Agrium Inc., US-based Mosaic Co.,
Russia’s Uralkalai and Uralchem and
Belarus’ Belaruskali, along with Israel Chemicals
Ltd (ICL) and Germany-based K+S AG, are the
world’s leading producers of the mineral.
According to data compiled by EuroChem, a phosphate, potash
and ammonia producer headquartered in Switzerland with mines in
Russia, PotashCorp and Mosaic each have over 13m tpa total
nutrient capacity, including 10m tpa and 8m tpa, respectively,
of potash and phosphate.
Uralkali and Belaruskali have respective capacities 7m tpa
and 6.8m tpa potash, while ICL and K+S have 4.8m tpa and 4.3m
tpa of nutrient capacity, the majority of which is potash.
China is the world’s largest consumer of
potash, with demand reaching a record 15.8m tonnes in 2015.
While the country’s consumption tailed off
slightly in 2016, speaking at the 2017 BMO Capital Markets
Farm-to-Market Conference in New York, PotashCorp said it
expected Chinese potash demand to regain momentum this year,
due to "farm consolidation supporting improved fertilisation
practices, and a continued shift to high-value,
nutrient-intensive crops".
Consolidation is also taking place in the Chinese potash
industry. For example, PotashCorp holds a 22% stake in
China’s Sinofert, the country’s
largest fertiliser importer and distributor and one of the
world’s largest fertiliser manufacturers. Sinofert
in turn owns 21 percent of Qinghai Salt Lake Industry Co.,
China’s largest potash producer.
PotashCorp’s data indicates that, excluding
China, Asian countries consistently consume around 9m tpa
potash in total, just behind North America at 9.3-9.8m tonnes,
while Latin America takes 11.7-12.2m tpa.
Last year, Mosaic predicted potash demand growth would be
driven by China and Brazil in 2017, while India would shift
from being a "drag" on the market to "a positive driver over
the next five years", alongside South East Asia. Mosaic has a
large in-country distribution network throughout Brazil, where
it enjoys a near-20% market share.
EuroChem meanwhile said that "moving into the potash market
was a good opportunity" for them.
"We currently have access to more than 10bn tonnes of potash
reserves in two key deposits in Russia, one at Gremyachinskoe
and the other at Verkhnekamskoe, which is one of the largest
deposits in the world. These two potash developments represent
very significant investments of between $7-$8bn for EuroChem
and are among our most important corporate priorities. They
will transform EuroChem into one of the world’s
five largest global fertiliser producers."
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Granule quality is improved with coating, colouring
and
anti-caking test runs.
ArrMazz |
Phosphate
Not all the world’s nutrient needs can be met by
potash, however. Phosphorus (P2O5) is
an essential element for plant and animal nutrition and
according to the US Geological Survey (USGS), phosphate rock
minerals are the only significant global resource of this
element.
Besides Mosaic, there are few significant phosphate
producers globally. Morocco’s Office Cherifien des
Phosphates (OCP) and Russian chemical producer PhosAgro are two
of the next largest phosphate companies, while Scandinavian
firm Yara and EuroChem both have notable but modest phosphate
capacities.
The USGS expects world phosphate rock capacity to increase
by 2% per year to 48.9m tonnes in 2020, from 44.5m tonnes in
2016, based on lower estimated production from China, which
will limit production growth.
"The largest areas of [phosphate capacity] growth were
planned for Africa and the Middle East," the USGS stated in its
most recent report on the mineral. "In Morocco, work continued
on the expansion of phosphate rock mines and processing
facilities, which was expected to double phosphate rock
production capacity by 2020," it added.
Hedley Widdup, fund manager at Australian investment firm
Lion Selection Group, told IM that Morocco may
be the phosphate producing nation to watch in the short to
medium term, as tightening supply in North Africa could swing
in favour of Moroccan production.
In its outlook for 2017 published at the end of last year,
Mosaic said that while disappointing consumption in India
undermined global phosphate demand growth in 2016, the company
was hopeful that a good monsoon season and above average
reservoir storage would bolster India’s appetite
for phosphate this year.
Mosaic was also positive about continuing robust demand from
Brazil, but noted that significant shifts in global shipment
volumes will be dictated by India and the Latin American
continent as a whole.
EuroChem meanwhile said it believed there would be a "more
encouraging environment" from next year.
"The beginning of 2017 was still challenging despite
generally better pricing points across nutrients," the
spokesperson told IM.
"The phosphate fertiliser market has seen good demand levels
across most major markets though in terms of nitrogen demand,
market sentiment has remained depressed with prices failing to
sustain upward momentum. However, we think the outlook is one
of continued steady growth and industry figures also point to
modest growth in demand for nitrogen, about 1.2% a year up to
2021, according to the International Fertilizer Association.
Overall, we would say that with demand growing and supply
additions ebbing, this sets the stage for the emergence of a
more favorable backdrop from next year into 2019 for nitrogen
and phosphate," the company said.
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Fertilser pellets are either distributed by hand or
by using a
spreader which distributed them among the crops.
BanksPhotos |
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ArrMaz collector and frother: Flotation froth loaded
with
phosphate mineral pouring off column flotation
cell.
ArrMazz |
Quality and prices
Despite generally solid demand, prices for potash and
phosphate have been volatile over the last five years, with a
general downward trend observable in the traded value of both
minerals.
"2016 was clearly a challenging year for the fertiliser
industry, due to a combination of factors, including lower
pricing, volatile energy pricing and uneven global nutrient
demand," a spokesperson for EuroChem told
IM.
"Agriculture commodity prices started the year depressed
from another bumper crop and a stream of new fertiliser supply
came to the market, outpacing demand and pressuring fertiliser
prices further. So far this year, we see continued pricing
pressure but predict a more encouraging environment emerging
from next year as the market begins to rebalance," the
spokesperson added.
In a presentation delivered by US-headquartered
speciality chemicals producer ArrMaz at the AIChE 2017
conference in Minneapolis, US, earlier this year, the company
said that sellers need to be strategic in order to benefit
fully from any price rises for fertilisers and to maximise
profitability during downturns.
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The Mosaic Esterhazy K1 potash mine: The Mosaic
Company
is the world’s leading integrated
producer and marketer of
concentrated phosphate and potash. The company
mines
phosphate rock from nearly 200,000 acres of
Mosaic-owned
land in Central Florida, and potash from four mines in
North
America, primarily in Saskatchewan.
sprokop |
According to ArrMaz, there is a positive relationship
between the BPL (bone phosphate of lime) content of a
fertiliser and its selling price. BPL is a reference to the
amount (by weight percentage) of calcium phosphate contained in
phosphate rock or ore body.
The amount of contained BPL is important, as higher grade
rock improves a fertiliser’s operational
efficiency, ArrMaz explained, which is the reason why greater
BPL content commands a higher price.
While other impurities and qualities also influence prices,
ArrMaz claims that using higher grade phosphate rock leads to
the production of purer phosphoric acid.
Proper processing is now integral to producing
fertiliser-grade phosphate. Easy-to-treat siliceous phosphate
resources have now largely been depleted, leaving miners to
extract mostly low-grade phosphate ores with high levels of
impurities.
Similarly, the potash industry is also facing processing
challenges. The concentration ratio, representing how many
tonnes of ore are needed to produce one tonne of saleable
product, is largely determined by the quality of the potash
ore. The sodium chloride content, particle size and colour
(which usually represents iron content) are key factors in
determining the grade of raw potash.
As demand for fertiliser minerals continues to grow,
competition among suppliers is also set to increase, while the
quality of mineral reserves is irreversibly declining. In these
circumstances, processing techniques will be key to preserving
producer margins, increasing the effectiveness of fertiliser
end products, and for minimising waste in an industry that
continues to be closely scrutinised for its efficiency and
environmental impact.
EuroChem meanwhile told IM that there was
"considerable discussion about pricing pressure as new capacity
in the industry comes on stream." However, it added that,
although this is a market in which there is already substantial
capacity, with more coming online, it believed the pressure
"will be far more modest than some analysts expect."
In terms of markets, EuroChem said that while Europe is the
largest market now, it is a more mature market.
"In terms of growth we are quite focused on southern and
Eastern Europe, while Russia and the CIS are the key growth
region for us," the company said, adding that "Latin America
and Brazil are significant" for them as well as "premium
product segments in Asia".