Inputs and outputs
In order to understand a business, an investor must know what goes in (inputs) and what goes out (products). To some degree, Mosaic is a vertically integrated company. This means that it supplies most of its own inputs rather than buying from others. Mosaic mines, processes, and distributes its own products. However, most of the inputs needed to process its mined materials are externally supplied.
Where do potash and phosphate come from?
After potash is taken out of mines, the product is treated, sized, and compacted before distribution. There aren’t many inputs in potash production. Still, Mosaic uses externally provided natural gas to power its mining process.
Phosphate rock is the main ingredient needed to produce phosphate, which Mosaic mines in Florida. Unlike potash, phosphate rock further needs to be processed with inputs such as sulfur, ammonia, and natural gas—all of which are provided by external suppliers.
Where do these products go?
Through leased or owned distribution warehouses, Mosaic sells its products to wholesale distributors, retail chains, cooperatives, independent retailers, and national accounts. In turn, these parties resell the product into the distribution channel or directly to farmers. In contrast to some of its competitors, Mosaic doesn’t directly sell its products to final users.
© 2013 Market Realist, Inc.
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