Fertiliser

Fertiliser – a tale of two trends

Phosphate – supply risk

Phosphate rock has been added to the EU list of critical materials (based on economic importance and supply risk). There is a limited supply of high-grade phosphate and risk of political unrest in some of the supplying countries. Conversely, leakage of phosphate has caused phosphate pollution in waterways.

 

In addition to its role in plant nutrition, phosphate is used in meat production, food additives and detergents.

In 2008 the price of phosphate rock increased by 800% and although the price fell significantly later in the year it has not returned to pre-2008 levels for several reasons notably:

• rising global demand for meat, dairy and biofuel has increased the need for phosphate fertiliser

• higher oil prices have increased the cost of processing and transport

• increased demand for sulphur to produce sulphuric acid, also needed for processing phosphate, has increased cost of extraction

• China has imposed a 135% export tax on fertiliser to protect domestic markets (although some countries are exempt).

The majority of phosphate deposits are in North Africa (64%), USA (15%) and China (6%). Apart from some small phosphate mines in Finland, the EU contains no phosphate deposits and is heavily reliant on imports from North Africa (46% of imports are from Morocco and Algeria), the Middle East (31%) and Russia (11%), all of which are at risk of political disruption.

On the positive side, since the mid-1990s, UK phosphate application levels have decreased due to cost-saving, soil testing and greater awareness of crop nutrition and eutrophication risks. Recent analysis suggests that Catchment Sensitive Farming reduced average agricultural total phosphate losses by 9% between 2006 and 2014. In autumn 2014 Defra is expected to set out further tools to tackle agricultural diffuse pollution, including phosphate although action may be no more than the introduction of EFA buffer strips.

Potash – over supply?

Meanwhile permission has been applied for in the UK to create the largest potash mine in the world. Operating at full capacity the plant is expected to produce 13 million tonnes of polyhalite ore per year. The only problem is that if permission were granted it would be  located in the North York Moors National Park. While permission would not normally be granted it maybe where there are exceptional circumstances of public interest.

Sirius, the company behind the application needs permission before it can start raising the £2.2bn needed to construct the mine. Sirius argues that the source makes particularly high quality potash fertiliser containing high levels of other nutrients and lower levels of salts harmful to plants.

However, the potash market is currently oversupplied, with other mines coming on stream globally.

In contrast to the other nutrients nitrogen supply is not limiting and the only constraint is manufacturing capacity to convert to fertiliser and the cost of energy to complete the conversion. Lower gas prices from fracking and additional plant look likely to have resolved the supply issues.

However, based on data produced by the International Fertiliser Association, if it were not for lack of political stability, it would appear to be buyers’ market for the major nutrients.

Click here for the latest supply and demand figures from the International Fertiliser Industry Association.

 
 

Key contacts

Andrew Wraith

Andrew Wraith

Director
Food & Farming

Savills Lincoln

+44 (0) 1522 508 973

+44 (0) 1522 508 973