Potash is an evaporite mineral (water-soluble mineral sediments) that results from the evaporation of bodies of surficial water.

What is Potash Used For?

Potash is used primarily as an agricultural fertilizer (plant nutrient) and is a source of soluble potassium an essential plant nutrient. Demand for potash is closely linked to the demand for agricultural products.

The Potash Market

Only 12 countries produce potash, but it is essential wherever crops are grown. Potash is produced by a variety of methods and from a number of sources including:

•Through the mining of sylvinite ore mostly in deep underground mines at depths of over 800m; and

•From solar evaporation pans (e.g. in the Dead Sea) to produce carnallite from which potassium chloride is produced.

Three countries control roughly 85% of the total world reserves of Potash:
Canada (38%), Russia (~ 33%) and Belarus (9%).

Asia remains the largest consumer of potash and is almost entirely reliant on imports whilst Eastern Europe (mostly Russia and Belarus) and North America (Canada) remain the largest producers.

Figure 1:
World Potash Market
(Source: PotashCorp, 2007) - ENLARGE

Growth in the demand for potash has accelerated since 2000 and has been 5.6 percent over the last five years, driven primarily by economic growth in developing nations and higher crop prices worldwide.

Figure 3:
Potential future demand for Potash
(Source: PotashCorp 2008) - ENLARGE

A High Margin Industry

Despite the depths at which the majority of potash mines operate, Potash mining remains a high margin business as illustrated in the following table showing the results of the two largest pure producers in the world. Both Uralkali and PotashCorp obtain potash from deep underground mines.