Potash (potassium chloride, KCl) is used extensively in the fertiliser industry and it (potassium, K) is an indispensable nutrient (along with Phosphate and Nitrogen) in promoting plant growth. With increasing population and changing dietary demands coupled with a reduction in arable land per capita, increasing productivity per unit of land is essential. The continued and even increased uses of fertiliser are therefore non-negotiable underpinnings of the constantly increasing demand for fertilisers over the past 30 years and projected for the next 30 years.
The potash market has remained resilient in the past 24 months with a modest price increase in this period with demand forecast to increase approximately 3% year on year to 2018 at least (Food and Agriculture Organization of the United Nations: World fertilizer trends and outlook to 2018 - Rome paper 2015). Muriate of Potash (KCl) is priced as units of 60% K2O. The conversion from K2O to KCl = K2O x 1.583.
Most potash formed millions of years ago through evaporation of sea water in ancient inland oceans. After the water has evaporated, the potassium salts are crystallised into beds of potash ore. For example, a 1,000m column of seawater would create 2.7m thick bed of potash. As potash is water soluble, it needs to be preserved by preventing water to pass through its layers. Potash is now predominately exploited from buried, underground deposits which are protected from surface water.
Potash Mining & Market
Approximately 70% of potash supply comes from conventional under-ground mining and treatment of sylvite and carnallite ore to produce MOP for global consumption.
The two principal potash ore minerals are sylvite (KCl - high grade) and carnallite (KmgCl3.6H2O - low grade). Carnallite is the primary mineral, with sylvite developed by secondary processes through the removal of Mg, Cl and H2O.
Muriate of Potash (60%K2O) granular fertiliser
The majority of potash is consumed as agricultural fertiliser and the main types of potash fertiliser:
- Muriate of Potash (MoP)
- Sulphate of Potash (SoP)
MOP is what Plymouth is targeting from its Gabonese projects and is the dominant form of potash, with most SoP a by-product by treatment of MOP feedstock.
As a result a unique combination of depositional criteria and preservation over millions of years is required. The majority (>80%) of the world's potash is produced by Russia, Belarus and North American producers. Less than 10 countries in the world contribute >95% of the world's potash production and barriers to entry into this market are mainly capital cost and development time.
Major agricultural nations such as Brazil import >90% of their potash requirements and Southern and Central America consumes approximately a quarter of the world's potash production.
To supply the Brazilian market, exporters need to endure substantial logistical hurdles which can cost up to 1/3 delivered price
Plymouth's advantageous location for direct shipping to South America
Plymouth has an inherent advantage in the shortest shipping distances, this can be worth as much as US$55/tonne.
Given the bulk nature of potash distribution, logistical and shipping (market) considerations are important. Therefore West Africa is ideally placed to enjoy a comparative shipping advantage for delivery to Brazil.