August 19, 2015 | Aguia Resources released a preliminary economic assessment for its flagship Três Estradas phosphate project. It points to a NPV of $273 million and an IRR of 25 percent. … Read MoreGet Phosphate Stock Investor Kits
June 17, 2015 | DuSolo Fertilizers announced that its Bomfim processing plant in Brazil has reached its full production capacity of 20,000 tonnes per month. The company plans to produce at least 100,000 tonnes of DANF during the current planting season, which kicked off in late May. … Read MoreGet Phosphate Stock Investor Kits
June 11, 2015 | | At Canvest the Investing News Network had the chance to chat with Ralph Rushton, vice president of corporate development at Focus Ventures. He spoke about what has been happening at the company’s Bayovar 12 phosphate project in Northern Peru and explained what highly reactive phosphate rock is. … Read MoreGet Phosphate Stock Investor Kits
When phosphate was introduced to the British Association of Science in 1840, it was the first time that science understood the essential role that minerals played in agriculture. Justus von Liebig, a German scientist, was at the forefront of modern agricultural science when he demonstrated to the Association the essential role that minerals like phosphate played in plant growth. By the 1860s, the British were producing 150,000 tons of this phosphate per year.
It wasn’t until 1867 that deposits of rock phosphate were discovered in the Southeastern United States, launching the country to the head of the phosphate and superphosphate industry.
The phosphorous that is produced from phosphate minerals is a type of fertilizer that replaces the nutrients in soil that helps increase crop and pasture yields. An essential element to all forms of life, phosphorus is an important part of the transfer of genetic information, as it is found DNA and RNA, as well as ATP and cell membranes. The element is required in energy production, by assisting in photosynthesis, metabolizing sugars, storing and transferring energy. Because of its essential properties, and because there is no known substitution for it, phosphate can be found in fertilizers all over the world, as well as being used as an animal feed supplement, food preservative and for several other chemical purposes.
Why invest in phosphate?
The largest phosphate reserves are found in Morocco and the Western Sahara, which was last calculated to contain 50 billion metric tonnes by the US Geological Survey. The country has barely scratched the surface of its potential however, as its output in 2014 was a total of 30 million tonnes, the second highest in the world last year. The top phosphate-producing country was China, with 100 million tonnes and in a not-so-distant third was the US, which produced 27.1 million tonnes of phosphate. The large deposits in the US can be found in Florida, North Carolina, Idaho and Utah. The only other country to hit the double digit million tonnes mark was Russia, who clocked in at 10 million tonnes.
The phosphorus reserves the United States have declined by a quarter since 2007 as the easy to access, high-grade rock reserves there have been mined out, which has increased the cost and complexity of the mining process.
Meanwhile, Morocco and China have far better reserve outlooks. Demand for phosphorous-based fertilizer products has continued to rise around the world due to a decrease in arable land per person. As the global population continues on its upward trend, the production of crops on nutrient-poor soil will become more common, leading to a higher need of fertilizers.
The world phosphate rock production capacity was expected to increase from 225 million tonnes in 2014 to 258 MT in 2018, while the world consumption of P2O5 contained in fertilizers should increase from 42.2 Mt in 2014 up to 45.9 Mt in 2018, with the largest growth coming from Asia and South America. The production capacity is expected to increase as existing mines in Morocco undergo expansions and new mine development takes place in Saudi Arabia. Existing mines in Jordan, Kazakhstan, Peru, Russia, and Tunisia are also expected to expand.
At the same time, the demand for fertilizers is expected to increase along with the population. In fact, the Food and Agricultural Organization (FAO) expects that global agro-mineral consumption will grow by 45 percent between 2005 to 2030, we will the demand for phosphate rock.
While phosphate is often an ingredient to fertilizers, some companies have been producing it in its natural organic form, a product called direct application natural fertilizer (DANF). The product, which is applied directly to soil in its natural, organic form, is commonly used for farming in Brazil, where DuSolo Fertilizers (TSXV:DSF) has its Bomfim project, located in the Cerrado region. The company is the sole supplier of the product within the project’s 500-kilometer region.
Another natural phosphate product that can be used directly as a fertilizer is highly reactive phosphate rock (RPR) and doesn’t take much work in the way of processing. Because it is natural, it can be branded organic and is therefore advantageous for organic farmers who don’t have many options in the way of natural phosphate sources. Focus Ventures (TSXV:FCV) is one company currently mining this product in Peru and have three projects operating there.