Potash refers to potassium-bearing materials and compounds, the most common of which is potassium chloride (KCl). Potassium is the third primary plant and crop nutrient after nitrogen and phosphorus. Potash deposits typically grade around 10-30% potassium oxide (K2O), and are currently mined at depths of up to 1.5 kilometers outside of Ethiopia.
Potash is primarily used as a soil fertiliser (which represents about 90% of current use) but potassium has a diverse range of uses and can be found in ceramics, pharmaceuticals and detergents. Potash fertiliser most commonly comes in the form of Muriate of Potash (“MOP” or KCl), and less commonly in other forms such as Sulfate of Potash (“SOP” or potassium sulfate, K2SO4). Potassium oxide (K2O) is used to define the potassium content of fertilisers, with the conversion factor for KCl into K2O being 0.631 (KCl is typically 60-63% K2O).
Approximately 80% of global potash production comes from conventional underground mining with the remainder from solution mines whereby heated water is injected underground to mix with potash deposits and the resulting brine is brought to the surface for separation. Conventional underground mining typically involves higher up-front capital costs and longer time to production, while solution mining has the benefit of lower upfront capital costs and quicker time to production but higher operating costs.
Global potash reserves are largely concentrated in Canada (46%) and Russia (35%).
MOP or potassium chloride (KCl) had a market of around c.65 million metric tons in 2015 – representing over 90% of the total potash market of around 71 million metric tons. It is used as a raw material in NK, PK or NPK fertilizers or applied directly or in blends, and is used across the world on a wide variety of crops.
SOP or potassium sulfate, by contrast, represents a small market globally, with demand of approximately 6 million metric tons in 2015. It is primarily used as a fertilizer source of potassium for plants intolerant of the chloride in MOP - mostly higher value fruit and vegetable crops - as well for its sulfur content. Sulfur is considered to be ‘fourth macro nutrient’ and is also required in significant quantities by most crops.
Emerging potash regions, such as Ethiopia, due to the near surface nature of its deposits and its comparative proximity to key markets, have the potential to become major potash production centres over the next five to ten years.
Global potash demand is expected to grow at 3.5% per annum from 2015 to 2021, underpinned by healthy demand growth in emerging markets such as Brazil, Southeast Asia, China and India.