Potash and phosphate are both used to produce fertilizers, which are becoming increasingly important as demand for food grows.
However, potash and phosphate have different roles in crop growth, and they cannot be used interchangeably. That’s because potash and phosphate are often precisely applied to meet the specific requirements of a particular crop, climate, soil type or topography.
For investors interested in fertilizer companies, it’s worth being aware of the difference between potash and phosphate. Having that knowledge can help guide investment decisions and ultimately lead to increased profitability. Below is a basic breakdown of the difference between potash and phosphate and why both can be compelling choices for investors.
What is potash?
Potash is a potassium-based product that is often bonded to other chemicals. It is predominantly used as a fertilizer to encourage water retention in plants, increase yields, improve taste and help plants resist disease. The two most common potash fertilizers are sulfate of potash (SOP) and muriate of potash (MOP).
Before it can be turned into fertilizers like SOP and MOP, potash ore must be extracted from the ground and then refined. There are two predominant varieties of potash ore: sylvinite and carnallite. Sylvinite typically has a higher value than carnallite as it requires less energy to separate the potassium chloride it contains than it does to separate the magnesium in carnallite.
Potash ore is extracted in two ways. In conventional underground mining, ore is dug out by large machines and transported to the surface. This method is expensive, but also the most common. Solution mining is less common, and involves injecting hot brine (a salt water solution) below the surface of the Earth and into an ore body. The potash-brine solution is then pumped back to the surface for cooling and separation on surface ponds.
Interestingly, many companies are focused on extracting potash ore from ancient underground oceans of potassium salts, and these are often located hundreds of feet or more below the surface. This can complicate the process of getting the ore out of the ground.
Canada is the world’s top potash-producing country, and also holds the largest reserves. Other top producers include Russia, China and Belarus.
What is phosphate?
Phosphate is critical for all living organisms, and a whopping 90 percent of it is used for crop applications in support of plant growth. Its primary function is to support strong cell development and water retention.
Phosphate rock, or “phos-rock,” is ore that contains phosphorus. It is located at various depths, and extraction typically requires the use of large drag-line buckets, which scoop up the material for refinement. The phos-rock is then beneficiated, or refined, with small phosphate pebbles being left behind.
Those phosphate particles are coated with hydrocarbons during flotation, and then float to the surface for further separation. The resulting product is beneficiated phosphate rock. Its phosphorus pentoxide content is suitable for phosporic acid or elemental phosphorous production.
Beneficiated phosphate rock is often upgraded into granular diammonium or monoammonium phosphate (DAP and MAP, respectively), both of which are high-grade, water-soluble fertilizers that can be applied to crops. Single super phosphate is a cheaper alternative to the popular DAP, and is obtained through a chemical reaction between rock phosphate and sulfuric acid.
The world’s top producer of phosphate rock by a wide margin is China. The US, Morocco and Western Sahara and Russia are also key phosphate rock producers.
Interested in getting more details on phosphate and phosphate investing? Our overview of the market can be found by clicking here, and we’ve put together a list of phosphate-focused companies here. It will be updated in the near future.
This is an updated version of an article originally published by the Investing News Network in 2013.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.