Mining Interest in Fertilizer Production Increases

Anglo American recently announced its revival plans for the former Sirius Minerals mine. This comes as more miners turn to the growing fertilizer market. The global fertilizer market is still being rehabilitated a year after Ukraine was invaded by Russia. The primary reasons for this are the fact that Belarus and Russia are huge fertilizer exporters and that increasing gas prices have affected ammonium nitrate and urea prices, which are key fertilizer inputs.

For instance, the price for potash shot up from about $250 per ton at the start of 2022 to almost $1,200 per ton by the end of last year. Potash is a potassium-rich salt and is different from ammonium nitrate fertilizer, which is produced by combining natural gas and nitrogen.

The price of potash has since declined because of importers using inventories rather than paying the high prices and seasonal movements. Despite this, industry leaders such as Nutrien have raked in record profits in the last year. The Canadian company recorded $12 billion in cash profits, highlighting a 70% year-on-year increase.

ICL, which manages the Boulby mine in the United Kingdom, doubled its 2022 earnings before interest, taxes, depreciation and amortization to hit $448 million.

Anglo American is set to mine polyhalite, which is applied directly to crops; the company isn’t the only mining firm with a project in the pipeline either. BHP Group runs the Jansen development project in Saskatchewan, which is just a few steps away from construction and production.

The BHP project was championed by Sir Andrew Mackenzie, former CEO of BHP. Initially, it was scheduled to begin production by 2015 then again this year; however, the major miner elected to shelve it for 2026.

Emmerson CEO Graham Clarke stated that the irony was that Anglo American was initially involved with the Boulby mine in the ‘60s before selling it because it didn’t fit its core business. Now, with agriculture and fertilizers becoming core businesses due to their importance globally, more miners are venturing into the market.

Emmerson is in the late stages of planning a potash mine in Northern Morocco. Clarke notes that Russia’s invasion of Ukraine changed the fertilizer market forever, given the sanctions imposed.

Clarke has in the past worked on Woodsmith with Sirius Minerals, after spending two decades at the Boulby mine. He noted that the disruption caused by Russia called for extra supply, adding that for decades now, supply in the potash market was dominated by a couple of major players.

As other miners are waking up to the opportunities in the fertilizer production segment, longstanding fertilizer producers such as Compass Minerals International Inc. (NYSE: CMP) are benefiting from the huge demand at this time.

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