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Published: February 2013
Potash is an essential constituent of plant and animal life—supporting plant growth, enzyme activation, protein formation, photosynthesis, water retention, respiration and the efficient uptake of other nutrients. Nearly 90% of all potash produced is used as a fertilizer, most of it in the chloride form. Where crops are sensitive to the chloride ion or soils may accumulate excess amounts of soluble salts, nonchloride potash products are used. In animals, it helps in the milk production process. The primary nonfertilizer uses of potash include specialty detergent builders, glass and ceramics, textiles, dyes, and chemical and pharmaceutical products.
World potash production is confined to only twelve countries and is dominated by the former USSR and Canada, which together accounted for about 64% of world production in 2012. Western Europe (primarily Germany), the Middle East and Socialist Asia accounted for about 29%, while the rest of the Americas (excluding Canada) accounted for an additional 7%.
The global potash industry was down in 2012, following weak demand from China and India, as well as adverse weather conditions in certain regions. Inventories from 2011 helped meet demand in regions like Central and South America, as production levels fell in 2012. The average world operating rate, which had dropped drastically in the mid-1990s, has been climbing steadily, except in 2009 when the global markets plunged. The global financial crisis caused an unprecedented decline in demand in 2009; between 2007 and 2009, demand fell almost 25% per year. Since then, a balance in supply and demand has been maintained, mostly thanks to increased production levels from countries like Canada to supply regions like Asia and Latin America that have increased demand.
The following pie chart shows world consumption of potash:
As the global population increases, the need for food and the nutrients required to produce food will correspondingly increase. Although crop prices and purchase timing may affect short-term demand, growth is definite in the medium to long term. Demand for food directly influences potash production. As developing nations improve their economies, there is a shift from traditional rice-based grain production to high-protein-based grain production. The increase in meat consumption will drive livestock production, which consumes crops like corn, which in turn increases the requirement for potash. The rate of growth of potash fertilizers is dependent on consumption patterns in China and India. Demand will also come from the production of regulatory-driven biofuels, including ethanol and biodiesel, as there will be an increasing requirement to cultivate more corn, sugarcane and palm crops; these crops will increase the use of potash. The United States is the largest ethanol producer and uses corn as a primary crop to produce ethanol; Brazil produces ethanol mostly from sugarcane. In Asia, Malaysia and Indonesia grow palm for use in biofuel production.
During 2012–2017, significant improvement in the world supply/demand balance is expected, as demand improves in China, Brazil and India. The world economy is also showing signs of steady recovery and global GDP is expected to be above 3.3% in the near future. With a steady improvement anticipated for world consumption, particularly for developing countries, the world production rate will be climbing back to a satisfactory level toward the end of the forecast period. However, operating rates are projected to be low, as announced capacities will come on line at a rate higher than the rate of growth in demand. Canada, China and Russia will be the primary beneficiaries of the revived world market and together will account for about 90% of the increased world production. Potential consumption would come mainly from China, India and Brazil, taking into account their soil nutrient balance. Brazil is one of the fastest-growing potash markets. The Southwest Asian market, primarily India, is also expected to have a fairly high increase in demand levels during the forecast years. Canada and Argentina will be adding major capacity, followed by Russia, China and Jordan. It is expected that the global capacity will increase by at least 25–30% during the next five years, if all proposed projects come to fruition. However, it is possible that not all announced projects will succeed because of financial impediments or permit issues. Depending on prevailing market prices, some of them may not be competitive with the big players in the field.