Engineering & Mining Journal

JUN 2016

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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FERTILIZER MINERALS 36 E&MJ; • JUNE 2016 www.e-mj.com Of the four key fertilizer raw materials, two—potash and phosphate rock—are mined, while the production of both sul- phur and ammonia is closely linked to the oil and gas industry. And, while slowing consumer demand has been one of the main drivers for price falls in the major in- dustrial metals and minerals, the need for ever-greater food production should mean that the companies producing potash and phosphates are in fnancial clover. Yet a quick skim through the crop of 2015 annual reports that have sprouted over the past few months clearly shows that this is, in fact, far from the case. Now faced with global overcapacity as the latest tranche of investment comes to fruition, as well as increased competition following the collapse in July 2013 of the BPC marketing agreement between Bel- aruskali and Uralkali, potash producers have been doing the same as every other mining company—cutting costs and, in some cases, mothballing mines. On a year-by-year basis, fertilizer de- mand is driven not only by the desire to in- crease crop yields, but also by the climate. As an example, if it is too wet when fertil- izer should be spread on farmland, farm- ers hold off on buying it. And, of course, fnance comes in to play: a succession of years with good harvests can hit agri- cultural commodity prices and farming cashfow, while a recession often means that credit is less readily available. In both cases, farmers cut their fertilizer budgets to suit. Less fertilizer bought means less raw material needed, and those over-optimistic forecasts for future demand that were made just a few years ago have now come back to haunt corpo- rate balance sheets. Production and Pricing Provisional fgures from the U.S. Geo- logical Survey (USGS) indicate that, of the three principal fertilizer ingredients, world phosphate rock production rose slightly from 2014 to 2015, to reach 223 million mt, while the output of both potash and sulphur remained essentially static at 38.8 million mt and 70.1 million mt, respectively. Taking a longer perspec- tive, world potash production has grown from around 27 million mt in 2000, as shown in Figure 1; the sudden dip in out- put in 2009 refected the global reces- sion that affected agriculture as well as the wider economy. Figure 2 illustrates the longer-term trend in phosphate rock production, which was less affected by the global economic recession, since when output has risen sharply. The picture for sul- phur is more complicated, however, given the various sources available. By far the greatest proportion comes from stripping sulphur from sour gas and oil, so output is closely aligned to both overall oil and The Vital Commodities Despite rapidly increasing demand for food production around the world, fertilizer minerals have been hit by falling prices and weak markets. E&MJ; looks at the reasons. By Simon Walker, European Editor Increasing use of fertilizers in developing countries will be a key driver for feedstock production. (Photo: Yara International) 2014 2015 Canada 11.0 11.0 Russia 0 7.4 0 7.4 Belarus 0 6.3 0 6.5 China 0 4.4 0 4.2 Germany 0 3.0 0 3.0 Israel 0 1.8 0 1.8 Jordan 0 1.3 0 1.3 Chile 0 1.2 0 1.2 USA 0 0.9 0 0.8 Spain 0 0.7 0 0.7 World 38.8 38.8 Table 2—Leading potash producer coun- tries, 2014 and 2015 (million mt) (Source: USGS) 2014 2015 China 10.5 11.0 USA 0 9.6 0 9.3 Russia 0 7.3 0 7.3 Canada 0 5.9 0 6.0 Germany 0 3.8 0 3.8 Saudi Arabia 0 3.3 0 3.3 Japan 0 3.2 0 3.3 India 0 2.8 0 2.8 Kazakhstan 0 2.7 0 2.7 UAE 0 1.9 0 1.9 World 70.0 70.1 Table 3—Leading sulphur producer coun- tries, 2014 and 2015 (million mt) (Source: USGS) 2014 2015 China 100.0 100.0 Morocco 0 30.0 0 30.0 USA 0 25.3 0 27.6 Russia 0 11.0 0 12.5 Jordan 00 7.1 00 7.5 Brazil 00 6.0 00 6.7 Egypt 00 5.5 00 5.5 Peru 00 3.8 00 4.0 Tunisia 00 3.8 00 4.0 Israel 00 3.4 00 3.3 World 218.0 223.0 Table 1—Leading phosphate rock produc- er countries, 2014 and 2015 (million mt) (Source: USGS)

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