Potash Fertilizer Cost Drivers and Production Flow
Potash salts are the key cost of production for potash, so most producers have an integrated production.
Jan. 13 2017, Published 8:17 a.m. ET
Potash production
Potash fertilizers mainly include MOP (muriate of potash), which is also known as potassium chloride or KCl, SOP (sulfate of potash), and sulfate of potash magnesia. Below is the production flow for potash fertilizers.
Production process
Unlike nitrogen and phosphate fertilizer production, potash fertilizer production is fairly straightforward. Potash ore from the mine goes through a size reduction and cleaning process. It goes through further steps of crystallization, compaction, and sizing, depending on the need of the end user, which can be agricultural or industrial.
Cost structure
Potash salts are the key cost of production for potash, so most producers have an integrated production. That means raw materials and production come from the company itself.
Most potash ore reserves are concentrated in Canada and Eastern Europe. In Canada, three major players—PotashCorp (POT), Mosaic (MOS), and Agrium (AGU)—dominate production. Together, these companies market and distribute their products through a jointly owned entity known as Canpotex.
In Eastern Europe, Uralkali and Belaruskali are two of the major producers of potash fertilizers. Israel Chemicals (ICL) also produces potash fertilizer.
Next, let’s see how cost of production can affect the profitabilities of fertilizer producers (SOIL).
