Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Potash Supply Stocks

Commodities / Agricultural Commodities Mar 24, 2011 - 08:36 PM GMT

By: HRA_Advisory


Cloth-dying and soap-making have employed residue from boiled plant material since ancient times.  The plants are reduced to brine and that evaporated until only the useful “potash” remains.  In the 19th century the active ingredient in this precipitate was fit into the periodic table as “potassium” with the symbol “K”.  Potash has stuck for potassium bearing salts mined in modern times.  The salts are processed into fertilizer, now 95% of the K market, which returns potassium to the plant world to increase agricultural yields.  Potassium is irreplaceable in this application, so growth of its supply is considered critical to expand global food output.  Potash salts are extracted in about a dozen areas, but only a few have large scale.  As with other bulk minerals, the boom in potash exploration is keyed to both greater supply diversity and more capacity.      

The most important potash basin in Saskatchewan supplies about 1/3 of the market and contains half of the current reserves.  Potash Corp of Saskatchewan (POT-T, N) is the region’s and world’s biggest potash miner, with Mosaic Co (MOS-N) and Agrium Inc (AGU-T, N) making up the balance.  All of these producers market through a single agency.  BHP Billiton (BHP-LSE, N.ADR) indicates it will move ahead on its Janson Lake deposit, acquired by take-over of Anglo Potash in 2008, despite a rebuff of a bid to takeover POT last year; Germany’s K+S KALI is also active there (see below); and a number of other Canadian juniors own projects in the basin.  These thick, rich 400 million year old deposits lie below 1000 metres (3000 ft) of cover.  Most are mined from high-capital underground operations, though several use wells to circulate solutions that absorb salts.

The second largest active basin is Upper Kama in western Russia whose largest producers, Silvinit (SLV-RTS) and Uralkali (URKA-RTS), are attempting a merger.  Fertilizer giant PhosAgro has also expressed an interest in Silvinit.  PhosAgro had gained Russian government approval to counter the bid by BHP for POT last year before Canadian governments nixed a take-over.  The next most important potash source is the Starobin basin in Belarus being mined by a state owned firm.  Russia and Belarus have joint marketing arrangements and together represent another 1/3 of potash output.  

Other significant producers include:  K+S KALI GmbH (K+S Group; SDF-XETRA) operating a series of German mines and which recently took over Canadian junior Potash One;  Intrepid Potash (IPI-N) mining in Utah and New Mexico;  Vale SA (VALE3-BOVESPA, VALE-N.ADR) from expanding mines in Brazil;  ICL Fertilizers (ICL-Tel Aviv)from mines in the UK and Spain as well as solar evaporate operations in Israel; and Arab Potash (APOT-Amman) with solar evaporate operations in Jordan.  These are significant producers with some room for expansion, but none approaches the scale potential of Saskatchewan or Russia/Belarus.    

The Israel and Jordon operations extract potassium from Dead Sea brine.  The Dead Sea is a present-day equivalent of the now dry Danakil Depression seabed on the Ethiopia-Eretria border where potash deposits were laid down less than two million years ago.  Danakil is generating a lot of interest.  Shallow potash deposits have been located along 10s of km of the 200 km (120 mile) long Depression, suggesting potential for both low entry costs and significant scale.

In Ethiopia the Indian miner Sainik Coal Mining is considering a move forward with a $1 billion potash development, and BHP Billiton is at an earlier stage of assessing holdings.  Smaller companies with established resources include Toronto based juniors Alanna Potash (AAA-TSX.V) and recently listed Ethiopian Potash (FED.TSX.V), both testing deposits first discovered in the 1960s.  Chinese funding has begun an upgrade and expansion of Ethiopia’s rail system that could move product to port facilities in Djibouti.  On the Eritrean side of the boarder Australian explorer South Boulder Mines (STB-ASX) is in the early stages of outlining a resource, Vancouver’s NGEx Resources (NGQ-TSX.V) from the Lundin group added potash ground to other in-country holdings, and others are showing interest.  The basin is close to Eritrean port facilities on the Red Sea.  Danakil means “salt lake” and it has supplied the common salt trade for millennia.  It may now become important to diversifying the modern potassium salts market.  

Potash Deposits and Products
Salts form as evaporation of trapped water increases its brine density.  The first of the “evaporites” to drop out are halite (NaCl), the table or common salt used in spicing and preserving food, and gypsum used in construction.  To generate potash salts a higher density 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.  This is one of the last salts to precipitate out of brine, so 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 high sylvite layer in an evaporite sequence, if it exists, is usually a mix of sylvite and halite.  The more common carnallite has a K content of 14%, or 17% K2O, but carnallite ore can contain other salts that upgrade its potassium content. 

The most common potash product is “muirate of potash”, or MOP (muria is Latin for brine,) which is potassium-chloride and therefore chemically equivalent to sylvite.  This is usually what a producer output will reference.  Another typical product is potassium-sulfate, K2SO4, or SOP that contains about 52% K2O but gains value as a sulfur source.  Salts such as kainite containing sulfur and can be preferentially upgraded to SOP. 

The USGS estimate of a global 2010 mine output at about 33 million tons (30 MM tonnes) is K2O equivalent.  Most general comments on pricing will be based on this higher grade form used to denote fertilizer content.  Potash pricing went from a stable US $150-200/tonne prior to 2007 to over $800/t in 2008 as the biofuel craze gripped markets. Post Credit Crunch pricing slumped to $300 but has recovered to near $400.

Fertilizer pricing is dependent on product form plus the content of other nutrients that may go into various retail sales products.  Potash deposits are valued on potassium content net of the costs to get that on to a loading dock in a useable form.  In comparing deposits or districts it’s important to note whether reporting uses K2O or KCl equivalent, or some other local notation.  As with most bulk mineral commodities valuation is based on contract pricing which can be tracked through news from marketing agencies Canpotex and Belarussian Potash Co who account for over 60% of sales.  Spot pricing, which is an important gauge of market sentiment, tends to trade in line with grain prices.  Flooding in Australia and low precipitation in China’s grain belt have been underpinning recent gains for both grains and potash.   


It’s a secular bull market for metals and resources. We’ve been saying that for ten years. And we’ve been right. HRA initiated coverage on 19 companies since early 2009 – the average gain to January 12, 2011 is 309%!

By David Coffin and Eric Coffin

    David Coffin and Eric Coffin are the editors of the HRA Journal, HRA Dispatch and HRA Special Delivery; a family of publications that are focused on metals exploration, development and production companies. Combined mining industry and market experience of over 50 years has made them among the most trusted independent analysts in the sector since they began publication of The Hard Rock Analyst in 1995. They were among the first to draw attention to the current commodities super cycle and the disastrous effects of massive forward gold hedging backed up by low grade mining in the 1990's. They have generated one of the best track records in the business thanks to decades of experience and contacts throughout the industry that help them get the story to their readers first. Please visit their website at for more information.

    © 2010 Copyright HRA Advisory - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

    HRA Advisory Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in