POTASH

Potash encompasses a variety of mined and manufactured salts, all of which contain the element potassium in water-soluble form. The term potash, however, also can refer specifically to potassic fertilizers, which are potassium chloride (KCl, or the mineral sylvite), potassium sulfate (K2SO4, or sulfate of potash (SOP), usually a manufactured product) and SOPM (K2SO4·2MgSO4, or langbeinite or double sulfate of potash magnesia). Muriate of potash (MOP) for fertilizer use is an agriculturally acceptable mix of KCl (95 percent pure or greater) and sodium chloride (halite) that includes minor amounts of other nontoxic minerals from the mined ore and is neither the crude ore sylvinite nor pure sylvite. Because the potassium content of its common salts varies, the potash industry has established a common standard of measurement for defining a product’s potassium content (or purity) related to the approximate potassium oxide (K2O) content. Production U.S. potash production was estimated to be 440 kt of K2O in 2022, 8 percent lower than that in 2021. World production was estimated to be 40 Mt of K2O, 14 percent lower than that of 2021. Canada (16 Mt), China (6 Mt), Russia (5 Mt) and Belarus (3 Mt) were the leading producers, accounting for 75 percent of total production. In the United States, MOP was produced by Intrepid Potash Inc. from solar evaporation and solution mines in New Mexico and Utah. Mosaic Co. and Intrepid each produced SOPM from underground mines in New Mexico. Compass Minerals International Inc. produced SOP from solar evaporation of brine from the Great Salt Lake in Utah. SOPM and SOP accounted for the majority of U.S. production in 2022. The world potash market experienced uncertainty of supply in the first half of the 2022 as potash exports from Belarus and Russia were reduced owing to economic sanctions on both countries. In January, the government of Lithuania, citing national security concerns, canceled the rail transport contract that allowed the state-run producer in Belarus, JSC Belaruskali, to ship potash from the port of Klaipeda on the Baltic Sea, its only marine export facility. This followed the enactment of economic sanctions on Belarus in 2021 by the European Union (EU) and the United States, which banned the import of potash. Belaruskali was the third leading potash supplier prior to 2022, shipping more than 6 Mt/a of K2O equivalent. Some Belarus potash was shipped by rail through Russia to China and other countries in the region and from a Russian port later in the year, but exports and production of potash from Belarus were significantly lower in 2022. Following Russian troops entering Ukraine in February 2022, the EU, the United States and other countries placed economic sanctions on Russia. Fertilizer products, including potash, were exempt; however, the EU placed import quotas on potash from Russia. The United States’ sanctions on certain Russian companies, financial institutions and individuals limited the amount of potash that could be imported. Russia responded by suspending fertilizer exports to countries that it deemed unfriendly. Russia continued exports to China, India and some countries in Africa and South America, but in 2022, its exports were estimated to have been about 30 percent lower and production was estimated to have been 45 percent lower compared with those in 2021. The effects of the economic sanctions on Belarus and Russia initially resulted in higher prices and supply disruptions. The higher prices caused many farmers worldwide to delay potash purchases, which led to growing stocks and lower prices in the second half of the year. As a result of the reduction in world supplies of potash from Eastern Europe, producers in Canada announced production increases that would be phased in over the next year of more than 600 kt of K2O equivalent. Consumption U.S. potash consumption was estimated to have decreased by 26 percent to 5,100 kt of K2O compared with 6,900 kt of K2O in 2021, owing to poor weather in some areas in the spring planting season and higher prices. According to a report from the International Fertilizer Association, world consumption of potash fertilizers in 2022 was estimated to have decreased to 37.5 Mt from 41.4 Mt in 2021, because of supply disruptions and high prices. Asia and South America were the leading consuming regions. Because it is a source of soluble potassium, about 90 percent of potash consumed globally is used as fertilizer (plant nutrient). Potassium is one of the three primary nutrients required for plant growth and maturation; the others are fixed nitrogen and soluble phosphorus. The remaining 10 percent of potash consumed is used to produce potassium chemicals, which are used in such applications as aluminum recycling, animal feed supplements, oil-well drilling mud, snow and ice melting, soap manufacturing, steel heat-treating, and water softening. Trade According to the U.S. Census Bureau, U.S. imports of potash decreased by 23 percent to 4.97 Mt of K2O in 2022, compared with 6.48 Mt of K2O in 2021, owing to decreased consumption of potash fertilizer. The United States was 91 percent net import reliant for potash in 2022. Canada (80 percent), Russia (11 percent), and Israel (4 percent) were the leading suppliers. The United States is not a significant exporter of potash. In 2022, exports increased to 267 kt of K2O from 112 kt of K2O in 2021, owing to an increase in shipments of high-value potassium chloride. Prices The North American price of potash increased substantially owing to tighter world supply after Belarus was forced to stop shipping potash and Russian exports were limited by trade restrictions. The Vancouver, British Columbia, Canada spot price for standard potash began the year averaging $263/t ($290/t) and ended the year at $533/t ($587/st). The U.S. price for SOP began 2022 in the range of $800/st to $830/st and ended the year in the range of $900/st to $1,055/st. The U.S. price for SOPM, fob Carlsbad, NM, began the year in the range of $445/st to $505/st and ended the year in the range of $480/st to $540/st. Industry developments A new potash mine was in the development stage in Osceola County, MI. The proposed solution mine would have an initial production capacity of 650 kt/a of MOP and was planned to increase to 1 Mt/a of MOP. The company planned to start production in 2025. Canada is the leading potash-producing country in the world, with 38 percent of global capacity. All production in Canada was from Saskatchewan in 2022. Potash was produced by three companies: Nutrien Ltd., which controls 24 percent of world MOP capacity at six mines; Mosaic, which operated three mines; and K+S Aktiengesellschaft, which operated one mine. Total production in Canada was estimated to be 16.0 Mt K2O in 2022, up from 14.2 Mt K2O in 2021. Outlook Potash is an essential fertilizer nutrient for which no substitute exists. Growing world population and its need for food will require continued increases in potash production and consumption. Additionally, increased ethanol production from corn and other crops will require proportional increases in fertilizer use. World annual potash production capacity was projected to increase to about 67 Mt in 2025 from 64 Mt in 2022. Most of the increase would be MOP from new mines and expansion projects in Belarus, Canada and Russia. However, the development of new mines in Belarus and Russia may be affected by economic sanctions on both countries. Production capacity in Canada was planned to increase by more than 3 Mt/a of K2O equivalent by 2025. New SOP mines were planned in Australia and Eritrea, and a polyhalite mine in the United Kingdom would also contribute to the capacity growth. New MOP mines in Brazil, Canada, Ethiopia, Morocco, Spain and the United States were planned to begin operation beyond 2025. Production in other exporting countries was planned to increase as well. The conflict between Russia and Ukraine may limit exports of Russian potash over the next several years, leading to a shift in world potash supply patterns.

POTASH

Authored by:
S.M. Jasinski

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To view the past issues of the UCA magazine you must be a member of SME/UCA.

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