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Fertilizers: prices high and rising - Apr 30

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One Last Big Push for Phosphate Mining

Cynthia Barnett, Florida Trend
... Mile after mile of strip-mined earth in shades of gray, with not a tree or other living thing on the horizon.

That moonscape [in west-central Florida' is the South Fort Meade Mine, a phosphate operation owned by the most powerful company that most Floridians have never heard of: Minnesota-based Mosaic Co. The $6-billion fertilizer company is one of only three phosphate firms left in Florida from the 100 that operated during the industry’s heyday in the early 20th century. Formed in 2004 by a merger of Cargill Crop Nutrition and IMC Global (Cargill remains 65% owner), it controls more than 300,000 acres of the state.

Mosaic is the biggest phosphate supplier in the world, and the soaring demand for fertilizer has sent its sales and profits skyrocketing. Mosaic’s share price jumped 345% last year, making it the fastest-rising U.S. large-cap stock.

Florida’s sandy soils are key to that success. The company gets 100% of its phosphate from the state - nearly 10 million tons a year. That amounts to more than half the phosphate sold in the U.S. and 16% of the global market, more than double any competitor’s share.

But the industry is entering its endgame in Florida. After more than a century of mining, Florida’s phosphate deposits are running out.

... For the industry, the question is whether the end of mining comes sooner or later. “Florida is out of business in terms of phosphate by 2040,” says G. Michael Lloyd Jr., research director of the Florida Institute of Phosphate Research

... Phosphate deposits are concentrated in the United States, China, Morocco and Russia. Historically, Florida has been the industry’s mother lode.

... Over time, increasingly efficient production began to deplete central Florida’s reserves. In 1900, it took miners a year to excavate a 15-acre site with picks and shovels. A century later, enormous draglines, working 24 hours a day, seven days a week, can dig up 15 acres a month.

... For now, the company is making so much money in phosphate that any talk of development is on hold. World phosphate stocks are low, while the rate of growth in demand has doubled every year for the past three years, according to the International Fertilizer Association. Dammonium phosphate (the most common fertilizer manufactured in Florida) has sold for as much as $1,000 a metric ton, up from $255 at the start of 2007.

Still, observers say a downturn is unavoidable. The industry’s fortunes have soared and plummeted like a roller coaster for a century. The last major shakeout, which began in 1999 and lasted through 2006, led to the creation of Mosaic and saw seven large-scale phosphate plants close in the United States, six of them in Florida. Mosaic itself shuttered two Florida plants, Green Bay and South Pierce, in 2006 as China transitioned from the largest importer to the second-largest exporter of processed phosphate. Chinese competition remains, and Morocco and other players are ramping up production. A large Saudi Arabian plant is coming online, as are other operations around the globe.
(1 May 2008)
All stories in this section were recommended by Bob Shaw (totoneilla) in the April 29 DrumBeat at The Oil Drum.

For more on phosphorus, see our series at Energy Bulletin:
Summary
Background reading
Peak Phosphorus (complete paper)
Also see a review by Mobjectivist.
-BA


More volatility in heated fertiliser market

Roger Chesher, Farmers Weekly (UK)
Demand and availability of food to feed the world is now driving fertiliser costs far more strongly than energy prices, high though they may be.

The situation is greatly exacerbated by politically motivated expansion of the production of biofuels, utilising land which might otherwise produce crops, and crops themselves are increasingly being used to feed livestock for the more sophisticated palates of developing nations.

The result is already being referred to as a crisis of sorts, the resolution of which is not yet clear. Already one leading academic, Jaap Schroder from Wageningen, asserts that mankind has reached the stage where choice is inevitable between maintaining biodiversity or feeding the world.

... Of greater concern is the availability of P and K relative to current great demand. Phosphate is largely supplied by the OCP (Morroco) and China. Supplies of rock are finite and limited and increases of mining capacity are resultant, ultimately, on governmental decisions. But why undermine such a rewarding price by mining more?

Broadly similar factors apply to potash.

Phosphate refiners have an added problem with escalating costs of ammonia and sulphur, both essential in their processes.

Domestic fertiliser industries across the world have no choice other than to live with this situation and respond to current global raw material prices. The result is quite extraordinary farm prices for domestic N, P and K.
(29 April 2008)


We can help Western Sahara gain independence

Kamal Fadel, The Age
... Illegally annexed by Morocco in 1975, Western Sahara is Africa's last colony and sometimes referred to as Africa's East Timor due to the striking similarities between the histories of the two nations.

In Australia, a significant portion of the commercial agriculture sector is reliant upon phosphate taken from Western Sahara. Revenue goes not to the Sahrawis but to the wealthy Moroccan monarchy, against the wishes of many Sahrawis.

... In short, Western Sahara is an untenable situation; a problem waiting a solution. An active role for Australia in Western Sahara makes sense for a number of reasons. First, there is the clear vested interest over the export of phosphates from the region. It's unlikely Australia's agricultural sector could survive without Western Saharan phosphate.

... there is the clear need in Western Sahara for middle power intervention. Australia can present as an independent broker in Western Sahara, calming tensions and opening paths to solutions left covered by major power inaction.
Kamal Fadel is the Australian representative for Polisario, Western Sahara's independence movement.
(29 April 2008)
Coming soon - phosphate wars? Beware when national self-interest seems to coincide with interference in the affairs of foreign countries. -BA


Fertiliser prices to rise this week, says Vinachem

VNS, Viet Nam News
State-owned fertiliser producers will raise prices this week, announced Nguyen Duy Sy, deputy director of the Viet Nam National Chemical Corporation (Vinachem).

... On the world market, the price of diammonium phosphate (DAP) has risen $350-400 per tonne to $1,400-1,500 per tonne over the past month, Sy noted. The price of potassium fertiliser has risen $130 to $1,000 per tonne and that of urea $70 to $450 per tonne. All were expected to continue rising.

While it has been possible to control the price of fertilisers which were dependent on domestic raw materials such as coal and ore, it was more difficult to stabilise the price of fertilisers using imported materials without suffering losses, wrote Hoang Manh Tien, head of Vinachem’s planning and marketing department, on the corporation’s website.
(29 April 2008)

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