Potash     

*Thousands of short tons per year of potassium muriate (KCl) expressed as K₂O. Commercial production is by shaft and solution mining of potassium salts, mostly the chloride, followed by purification using froth flotation or crystallization.

Mississippi Chemical Corp., which filed for Chapter 11 bankruptcy protection last May, temporarily idled its two potash mines in Carlsbad, N.M., the following month. The two potash mines have been taken down primarily as a result of excess inventories. While the mines are closed, Mississippi Chemical intends to serve its customers from existing inventory. The company projects that the two mines will be returned to active production after summer’s end.

In February 2000, Potash Corporation of Saskatchewan sold its small potash facility, Moab Salt, in Moab, Utah, to Intrepid Mining, LLC, a subsidiary of Intrepid Oil &

Gas LLC (Denver, Col.).

Profile last published 5/1/00; this revision, 7/21/03.

DEMAND

2001: 6,956 thousand short tons (K₂O equivalents); 2002: 6,857 thousand short tons; 2006: 6,995 thousand short tons, projected. Demand equals production plus imports (2001: 6,039 thousand short tons; 2002: 5,940 thousand short tons). Exports are negligible.

GROWTH

Historical (1997 - 2002): -1.1 (negative) percent per year; future: 0.5 percent per year through 2006.

PRICE

Historical (1997 - 2002): High, $86 per short ton, std., bulk, f.o.b. works; low, $78, same basis. Current: $85, same basis.

USES

Agriculture, 87 percent; chemicals, 13 percent.

STRENGTH

Potash has been a continuing bright spot, albeit a modest one, in the fertilizer business since 1999, with pricing remained fairly stable. Supplies have been plentiful and in comparison to other fertilizer ingredients, potash has not been hit as hard by the rising energy costs that have plagued the nitrogen fertilizer products. Demand, however, has been sluggish.

There are no substitutes for potassium as an essential plant nutrient and an essential nutritional requirement for animals and humans. Manure and glauconite (a potassium containing mineral in the mica group) are low-potassium-content sources that can be profitably transported only short distances to the crop fields, leaving potash as the principal potassium fertilizer source.

Potash growth demand has chiefly been coming from the chemicals sector, and largely due to caustic potash, which is growing at 1.5 percent annually.

WEAKNESS

US production of corn has remained nearly constant over the reporting period, fluctuating closely around 9.7 billion bushels annually. This no-growth situation in potash’s major application segment translates into steady demand but without growth for potash.

OUTLOOK

This year will continue to offer challenges to the fertilizer business as a continuing depressed farming economy will suppress both price and demand growth for potash. Increasing demand for fuel grade ethanol derived from corn could eventually reach 5 billion gallons of ethanol by 2012. The corresponding corn required for the ethanol production will be about 2 billion bushels, or about 20 percent of all corn produced in the US. This corresponds to 800 million bushels of corn consumed in 2002 for producing ethanol. Long-term, the fertilizer sector for potash looks very encouraging, but meanwhile, only modest growth for potash is projected in the forecast period; 0.5 percent annually.

FIVE YEAR DATA