Potash Demand

A number of global changes have contributed to an increase in demand of agricultural products over the years, some of which include the following:

  • an increase in world population
  • improving diets for hundreds of millions of people in emerging markets
  • a decline in arable land per capita and
  • increased interest in alternative (environmentally friendly) fuels, also known as bio-fuels.

To help meet the demand for agricultural products, governments, private industry and agricultural communities are actively using and promoting fertilizers, such as nitrogen, phosphate and potash, to improve crop yields.

Potash Production

In 2011, the global demand for fertilizer totaled 185 million tonnes, with over 50 million tonnes attributed to potassium-based fertilizers (i.e. potash) (FAO Fertilizer Outlook). Many market analysts believe the demand for potash will continue to grow, which will continue to support current and future investment in potash exploration and development projects.

According to the U.S. Geological Survey, Canada, Russia, Belarus, Germany and Brazil hold the largest potash reserves. Canada, Russia and Belarus were the largest potash producers during 2011, with 13.5 million tonnes, 9.5 million tonnes and 7.5 million tonnes, respectively.

Potash production (mining) can be time and capital intensive, due to the location of many potash deposits. Potash is formed by the evaporation of sea and the compression of the evaporated minerals, by sediment layers over time. As a result, potash is often found in deep underground deposits.

Despite the depth at which many potash deposits are found, many potash projects are economical because of strong demand. Prices for potash are quoted in the spot market or contract market. So far during 2012 the contract price quoted was as high as US $575 per tonne CFR. Analysts continue to forecast a strong demand for potash over the next several years.

Potash Use

Approximately 90% of potash produced is used as fertilizer. Potash is also known as potassium chloride, which is the main fertilizer product. The remaining supply of potash is used in chemicals production. Potash fertilizer is crucial for plant development, growth, yield and increases nitrogen uptake.