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Published: December 2009
The world phosphate rock industry, following a relatively buoyant period that ended in the late 1980s, experienced a sharp decline as a result of the socio-economic-political problems experienced in the Eastern bloc counties. The world's operating rate dropped from 83% in 1990 to a low of 68% in 1993. The industry has exhibited only a marginal upward trend since. World production and consumption experienced another cyclical low in 2001. Since then, production had increased with demand for phosphate fertilizers until the ongoing global economic crisis. In late 2008, global demand for phosphate fertilizers fell drastically, resulting in minimal trade and reduced production. An average annual growth rate of around 3.5% is projected for consumption during 2008–2013. The phosphate rock market, which has been somewhat tight recently, is expected to loosen after capacity addition projects come to fruition during the next five years, coupled with reduced demand.
China is the largest phosphate rock producer, accounting for 34% of world production in 2008. In October 2008, the Chinese government enacted stricter controls for exports of phosphate rock based on the need for self sufficiency with respect to domestic consumption for fertilizer production to be used in food cultivation. The United States, Africa, the former USSR, and the Middle East are also large producers. World phosphate rock production increased by nearly 50% between 1993 and 2008. Large increases occurred in Socialist Asia, Africa, and the Middle East. Large declines have occurred in the United States, the former USSR, and Mexico since 1993.
The following pie chart shows world consumption of phosphate rock:
The primary market for phosphate rock is the production of phosphate fertilizer products such as ammonium phosphates and superphosphates. It is estimated that fertilizer production accounts for more than 90% of world phosphate rock consumption. The balance is consumed as animal feed and in a variety of industrial/technical applications. Apparent world consumption of P2O5, which by definition is equal to world production, peaked in 1988 and had dropped 30% by 1993. Although recovery occurred between 1993 and 1998, a cyclical downturn occurred once again in 2001, led by significant drops in consumption in the United States, Socialist Asia and Western Europe. However, in keeping up with population growth and the rate of growth for developing economies, the past five years have seen robust growth and that trend is expected to continue into the future.
However, the fertilizer segment's demand for minerals has been dropping since the advent of the ongoing economic downturn and has continued on a sluggish path in 2009. Major producers have cut down their production to either boost prices or even to stabilize the market. Mosaic cut its production by about one million metric tons in 2008 and is slated to cut another one million metric tons in 2009. However, new projects have been planned outside the United States, mostly in Africa and South America.
As and when the fertilizer market improves, the phosphate rock supply is expected to exhibit tightness in the medium term, with limited capacity additions coming on stream. After the Vale project in Peru for rock production and Ma′aden project in Saudi Arabia for diammonium phosphate start operations and ramp up to expected production levels, the situation is expected to ease. It is expected that if all announced projects come through, global capacity will be increased by as much as 25–30% in the next five years.