An industry all about growth.
- By 2050, the world’s population will increase by almost 30%
- Global demand for potash is forecast to increase by almost 3% per year
- Arable land per person globally continues to dramatically decrease – from 4,500m2 in 1960 down to just 1,800m2 in 2050, which will significantly increase the need for potash
The power of potash.
The name ‘potash’ comes from an early production technique where potassium was extracted from plant and wood ash by soaking it in water inside a large pot. Once the solution evaporated, what was left behind was ‘pot ash’.
At the time, this was used primarily for making soap and glass. However, the positive effect it had on plants was soon recognised and the real benefits of potassium began to be realised.
Production techniques have changed since then, but the term ‘potash’ still refers to potassium rich minerals most commonly used as fertiliser.
Why is it a vital resource?
Potassium is one of the three key nutrients required for growth, along with nitrogen and phosphorous.
Potassium plays an essential role in:
- improving plant quality – the size, shape, colour and taste
- regulating carbon dioxide uptake
- regulating water uptake and loss
- improving drought resistance
- improving resistance to pests and disease
There must be an adequate supply of potassium in the soil to achieve optimum plant growth. Without it, plants have reduced yields, are poor quality, utilise water less efficiently and are more susceptible to pests and disease.
Although potassium is naturally occurring in soil, to varying degrees, after years and years of cropping and nutrient removal during harvest, the agricultural soil in many parts of the world has become depleted of potassium and now requires a regular supply of potash to maintain productivity.
As soil quality around the world declines and the global demand for produce increases, potash will play a vital role in the expansion of the world’s food supply.
The potash market.
The potash market has experienced rapid growth in the last decade, primarily due to an increased demand for food, fibre and feed in developing countries. This upward trend can be directly linked to a number of fundamental factors including global population growth, increasing incomes in emerging markets such as Brazil, Southeast Asia, China and India (which creates demand for improved diets) and the decreasing availability of arable land.
In the years to come, population growth and dietary changes in the developing world are expected to be the key drivers of the increasing global food demand, which is precisely what drives the potash market. South Harz Potash expects the global demand for high-grade Muriate of Potash (MOP) to increase to 88Mt by 2033.
Another key driver of the potash market is that it is a finite resource, with no known substitutes in agriculture. The vast majority of the world’s supply comes from only a few countries with Canada being the world’s biggest supplier and exporter, producing over one third of the word’s global output in 2018 (over 68Mt). This is followed by Russia, Belarus, Israel, Germany and the rest of the world.
Although the COVID-19 pandemic led to a dip in prices, a confluence of demand and supply factors continue to result in a tight market. Global demand is expected to increase by 2.9% in 2021 with this demand primarily driven by China and Brazil. In addition, a dramatic crop price increase is forecast for 2021, with the soya index surging by 76% and corn index by 72%. The long term price for MOP is predicted to be $260-$320/t.