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Top potash stocks
Demand for potash is expected to remain healthy as the world tries to feed its burgeoning population. We have a look at the top producing potash stocks as well as those developing new projects.
Investing in potash: an introduction
What is potash?
Potash is a term used for potassium fertiliser. It is predominantly used to help the agricultural industry improve yields. Crops grown with potash also tend to be of better overall quality, more resistant to disease and consume less water.
Potash is a naturally occurring substance, but the levels of potash in surface-level agricultural soils have been in gradual decline as farming techniques have intensified. Lands once rich in potassium have slowly become depleted and, now, farmers must add it in order to grow decent crops. This has driven the need for potash to be produced elsewhere and sold to farmers so they can top up their land’s potassium levels after each harvest.
There are several sources of potash. The two predominate ones are potassium chloride, also known as Muriate of Potash, or MOP, and potassium sulfate, known as Sulfate of Potash, or SOP. The others include potassium-magnesium sulfate, potassium thiosulfate and potassium nitrate.
The type of potash needed depends on what crops are being grown and where. For example, some crops such as coconut or potatoes are more tolerant to chloride, making MOP a more suitable fertiliser, whereas others, like strawberries, are not and therefore more suited to SOP.
Potash increases crop yields using more limited land, which will be vital if the world is to feed itself as the global population continues to grow and people’s dietary habits change. Potash demand is therefore set to rise over the coming years.
Top potash producing countries
Potash production is heavily concentrated in just four countries. Over 75% of the world’s potash production comes from Canada, Russia, Belarus and China, and over half of the world’s reserves lie within the top two producing nations.
|Country||2018 Production (Tonnes)||% of world total||Reserves of Potassium Oxide Equivalent (Tonnes)||% of world total|
|Canada||12 million||28.50%||1.2 billion||20.70%|
|Russia||7.3 million||17.40%||2 billion||34.50%|
|Belarus||7.1 million||16.90%||750 million||12.90%|
|China||5.5 million||13.10%||350 million||6%|
|Germany||2.9 million||6.90%||150 million||2.50%|
|Israel||2 million||4.80%||270 million||4.70%|
|Jordan||1.4 million||3.30%||270 million||4.70%|
|Chile||1.1 million||2.60%||100 million||1.70%|
|Other countries||600,000||1.40%||280 million||4.80%|
|World total||42 million||100%||5.8 billion||100%|
Nutrien is a global giant that makes over 27 million tonnes of potash, nitrogen and phosphate-based products for the agricultural industry each year. Over 20 million tonnes of production is potash, which makes Nutrien the largest producer in the world. It mainly produces from six mines in Saskatchewan, Canada.
Mosaic mines and processes phosphate and potash into crop nutrients. It also markets and ships its own products around the world. The company has capacity to produce over 10.5 million tonnes of potash each year. Although it is a US company with one mine in the country, most of its mines and refineries lie in Canada. Its newest mine, Esterhazy K3 in Saskatchewan, is due to come online in 2024, and is set to be 'the largest, most competitive underground potash mine in the world'.
Mosaic’s North American phosphates operations have the capacity to produce 11.7 million tonnes of phosphate fertiliser, while its South American arm can produce another 10.5 million tonnes of finished concentrated phosphate.
K+S is a German company and one of the largest producers of potash in Europe. It also makes magnesium and salts. Its operations are predominantly based in Germany, but it has been expanding elsewhere with projects in Canada, the US and Chile. It produces around 7 million tonnes of agricultural products each year.
The company introduced a long-term strategy in 2017 to transform the company by 2030. This involves integrating its potash and magnesium business with its salt operations, which were acquired ten years ago. The strategy aims to increase annual earnings to €3 billion by 2030 from less than a €450 million in 2018.
Israel Chemicals, better known as ICL, is an Israeli company dual-listed in Tel Aviv and New York. It has gradually expanded into a global business since helping to establish its home country’s potash industry 80 years ago. Israel Corp, the largest holding company in Israel, owns just over 45% of the business.
The company is the sixth largest potash producer in the world and is responsible for over one-third of global production of bromine, which is used in agricultural chemicals, dyestuffs, insecticides and pharmaceuticals. It has become one of the largest providers of specialty fertilisers, bromine and flame retardants, and a significant supplier of pure phosphoric acid.
Its operations include the Boulby mine in the UK, where the company has shifted towards exclusive production of Polysulphate. It claims to be 'the first and only supplier of this new and unique fertiliser'.
Intrepid Potash (IPI)
Intrepid is a smaller US-based potash producer formed in 2000 when it acquired assets from Potash Corp. It supplies potassium, magnesium, sulfur, salt and water to help grow crops, produce animal feed and for use in the oil and gas industry.
The company has three mines: Wendover and Moab in Utah, and Calrsbad in New Mexico. These are solar evaporation mines, which 'provide one of the safest, lowest cost, environmentally friendly production methods for potash and salt'. It also has an underground mine at Carlsbad that hosts langbeinite, a rare naturally-occurring mineral that is 'found only in a few places in the world'. This too is used in fertiliser, giving the company a potential edge in the market.
Sirius Minerals (SXX)
Sirius Minerals has drawn a lot of attention since being established in 2010. The company has been gradually developing the Woodsmith mine in the UK, which is expected to produce up to 20 million tonnes of polyhalite – the name given to the unique mix of potash at the site – each year. With over 2.6 billion tonnes of the stuff, it is the largest reserve of its type in the world.
However, the project is vast, expensive and more akin to those developed by major mining companies. Sirius is currently racing to find the billions it needs to finish construction and avoid total collapse, leaving this potentially world-class project at risk. The company has been particularly popular with UK investors, with many of its 85,000 retail investors thought to be from the local area.
Highfield Resources (HFR)
Highfield Resources is an Australian business that is developing five potash projects in Spain, giving it the potential to find a lucrative source for the European market. These are Muga, Vipasca, Pintano, Izaga and Sierra del Perdón, which are collectively known as the Geoalcali projects.
The company is still at a very early stage and is securing the necessary permits and concessions it needs to begin work.
Salt Lake Potash (SO4)
Salt Lake Potash is an Australian company that is dual-listed in London. The company is developing a number of salt lakes in Western Australia, collectively known as the Goldfields Salt Lakes project, with a view of producing up to 200,000 tonnes of SOP per year. It is initially building a 50,000 tonne per year demonstration plant that will provide a template for the larger project.
The project is shallow and fairly low-cost, with the capex budget set at $237 million (AUD) with just over a three-year payback.
Kalium Lakes (KLL)
Kalium Lakes is another company looking to produce SOP in Western Australia, but is at a more advanced stage than most. The company has recently completed a bankable feasibility study on the Beyondie project and will soon make a final investment decision, with production to begin in 2020.
It will initially produce 90,000 tonnes per year and hopes to double that output over the longer term, with the project thought to have a 30 to 50-year mine life.
Kazakhstan Potash (KPC)
Kazakhstan Potash is an Australian miner that owns two potash deposits in Kazakshtan named the Zhilyanskoye project and the Chelkar project. The two projects have been included in a co-operation agreement between Kazakhstan and China, and forms part of the latter’s ‘One belt, One Road’ initiative. This will see the miner create a potash production base of over 7 million tonnes per year to supply the domestic and Chinese markets.
The company is also currently acquiring the Satimola potash deposit in Kazakhstan from Samitola Ltd.
Emmerson is registered in the Isle of Man and listed in London. The company is focused on the development of the Khemisset project, a 'low capex, high margin' potash project in Northern Morocco. The miner is aiming to produce around 800,000 tonnes of MOP per year over the initial mine life of 20 years. Emmerson says the pre-production capex of $406 million is 'less than half of its global peer average'.
Emmerson is currently completing a feasibility study on the project with a view of releasing the final study in the first half of 2020.
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Deze informatie is opgesteld door IG Europe GmbH en IG Markets Ltd (beide IG). Evenals de disclaimer hieronder bevat de tekst op deze pagina geen vermelding van onze prijzen, een aanbieding of een verzoek om een transactie in welk financieel instrument dan ook. IG aanvaardt geen verantwoordelijkheid voor het gebruik dat van deze opmerkingen kan worden gemaakt en voor de daaruit voortvloeiende gevolgen. IG geeft geen verklaring of garantie over de nauwkeurigheid of volledigheid van deze informatie. Iedere handeling van een persoon naar aanleiding hiervan is dan ook geheel op eigen risico. Een door IG gepubliceerd onderzoek houdt geen rekening met de specifieke beleggingsdoelstellingen, de financiële situatie en behoeften van een specifiek persoon die deze informatie onder ogen kan krijgen. Het is niet uitgevoerd conform juridische eisen die zodanig zijn opgesteld dat de onafhankelijkheid van onderzoek op het gebied van investeringen wordt bevorderd, en dient daarom als marketingcommunicatie te worden beschouwd. Hoewel wij er niet uitdrukkelijk van weerhouden worden om te handelen op basis van onze aanbevelingen en hiervan te profiteren alvorens ze met onze cliënten te delen, zijn wij hier niet op uit. Bekijk de volledige disclaimer inzake niet-onafhankelijk onderzoek en de driemaandelijkse samenvatting.
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