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World’s Leading Potash Producers

On 29 June, the Uralkali Board of Directors decided to halt Uralkali’s exports through BPC and direct all export volumes through Uralkali Trading. BPC is a joint venture between Uralkali OAO (Russia) and Belaruskali OAO (Belarus) and the exclusive exporter of both companies’ potash products.

Uralkali executives blame Belaruskali for making deliveries outside BPC, which is the main reason for terminating the cooperation. According to data from the US Geological Survey National Minerals Information Center, Belarus and Russia together are estimated to account for 36% of the world’s mined potash production, with both countries being major exporters of the crop nutrient.

Price competition between these countries might translate into a collapse of global potash prices. Uralkali’s executives predict that the break-up of BPC may trim potash prices by some 25% by the end of the year.

This scenario would harm potash producers around the world, but the country with the most to lose will be Canada, the global leader in mined potash production. Moreover, according to the UN’s Food and Agriculture Organization (FAO), in 2012 potash fertilizers accounted for 74% of all the crop nutrients produced in the country, meaning that the Canadian fertilizer industry as a whole would be hard hit. The turnover of local producers stood at US$11 billion in 2012. The companies with the greatest interest in the Canadian potash business are Potash Corp, Mosaic Co and Agrium Inc. Moreover, BHP Billiton might halt its US$12 billion potash project in Canada as the expected return on investment deteriorated significantly overnight.

On a positive note, some will benefit from the recent development. In absolute terms, China’s farmers will benefit the most because the country’s agricultural industry consumes the largest amount of potash. However, nitrogen and phosphate fertilizers are dominant in China and so, in relative terms, the most notable contractions in spending on fertilizers will be enjoyed by farmers in Brazil, Malaysia and Belarus, where potash accounts for roughly half of fertilizer demand.

World’s Largest Consumers of Potash

Source: Food and Agriculture Organization