As the world’s population continues to grow, so does the number of mouths to feed. It is becoming more and more important for farmers to grow more crops more efficiently.
That’s where fertilizers come into play — they not only increase the quality of food being grown, but also increase crop yields. Farmers use various fertilizers to grow crops, but the two most common are sulfate of potash (SOP) and muriate of potash (MOP).
Here the Investing News Network explains the common uses for these two types of potash, also looking at methods of mining them and which companies are doing so.
Types of potash: Muriate of potash
Potassium chloride, or MOP, is the most commonly used potassium fertilizer and can be used to farm a variety of foods, particularly chloride-loving vegetables like sugar beets, celery, Swiss chard and other plants that are resilient to chloride. Its chloride content can be beneficial for soils that are low in chloride, making them more disease resistant; however, if the soil or irrigation water being used has high levels of chloride, the added content can create toxicity. This means that the levels have to be carefully managed, and MOP must only be used for select crops.
Still, MOP remains the most commonly used potash fertilizer, with about 55 million tonnes being sold and used annually. Having said that, an issue with the popularity of MOP is that in recent years production has overcome demand, resulting in lower-than-desired prices for the product. According to CHF Investor Relations, “[a]s demand continues to increase, existing MOP producers will ramp-up idle capacity and re-evaluate mothballed brownfield expansions. These sources of supply will need to be absorbed by the market before greenfield MOP projects make economic sense.”
Highfield Resources (ASX:HFR) is an MOP exploration company that currently has four potash projects in Spain. On June 23 2016, it released results of a scoping study for the Muga project. MOP produced at Muga will be converted to SOP.
While PotashCorp (TSX:POT,NYSE:POT) is the biggest MOP producer in Canada, there are juniors looking to break into the market. One example is Western Potash (TSX:WPX), a Saskatchewan-based company currently in the development stage at its Milestone property. The company completed a scoping study for a pilot plant-scale selective solution mining operation at the project in July 2015, and also received $80 million in funding from China’s Beijing Tairui Innovation Capital Management. Most recently, Western Potash awarded the engineering and procurement services contract for Milestone to Amec Foster Wheeler.
Another Saskatchewan company looking to get a piece of the MOP market is Gensource Potash (TSXV:GSP). On April 7, the company signed an asset purchase agreement and term sheet for an offtake agreement with Yancoal Canada Resources. It released a resource estimate for its newly acquired Vanguard project on April 28
Types of potash: Sulfate of potash
Potassium sulfate, or SOP, is considered a premium-quality potash. It contains two key nutrients for growing crops: potassium and sulfur. Using SOP not only improves quality and crop yields, but also makes plants more resilient to drought, frost, insects and even disease. SOP has also been known to make food taste and look better and improves a plant’s ability to absorb other essential nutrients, such as phosphorous, iron and other micronutrients.
SOP is most commonly used on high-value crops like fruits, vegetables, nuts, tea, coffee and tobacco. The fertilizer works better on crops that are sensitive to chloride, which can sometimes have a toxic impact on fruit and vegetable plants.
SOP comes at a higher price than MOP and is also in higher demand, according to CHF, as there is an inability to economically expand supply through existing production processes.
Unlike MOP, SOP is not a naturally occurring mineral, and usually must be produced through chemical methods. While there are some operations that harvest salt mixtures from natural brines to produce SOP, the most common method used to produce it is called the Mannheim process.
The process involves pouring raw materials into a muffle furnace that is heated above 600 degrees Celsius. That creates a reaction between potassium chloride and sulfuric acid.
SOP may also be produced by reacting potassium chloride with various sulfate salts to form what is called a double salt. This substance can then be decomposed to create potassium sulfate.
“The most common raw material employed for this purpose is sodium sulfate. Sodium sulfate, either in the form of mirabilite (also known as Glauber’s Salt) or sulfate brine, is treated with brine saturated with MOP to produce glaserite. The glaserite is separated and treated with fresh MOP brine, decomposing into potassium sulfate and sodium chloride,” explains IC Potash. This is the second-greatest source of global SOP supply, accounting fro about 25 to 30 percent.
IC Potash uses its own method of developing SOP, which it calls the Ochoa process. This involves processing the mineral polyhalite to convert it into SOP through crushing and washing, calcination, leaching, crystallization and granulation.
Potash West (ASX:PWN) also has its own method of producing SOP. It is called the K-Max process, and the company developed it with its partner Strategic Metallurgy. Essentially, the process involves the extraction of SOP from glauconite.
Potash West has applied for a patent for the process. Here’s how it works:
“[The K-Max process] uses a concentrated hot acid leach that breaks down the glauconite recovering all the potassium within the mineral in 6 to 8 hours. The next step is precipitation leaching and solid liquid separation to procure high magnesium potash, alum and iron oxide.”
As mentioned, there are some operations that produce SOP using salt mixtures from natural brines. This requires brine with high sulfate levels, typically found in salt lakes.
Some examples of companies able to use naturally occurring brines are Compass Minerals International (NYSE:CMP), which operates out Great Salt Lake in Utah, and Chile’s Sociedad Quimica y Minera (NYSE:SQM), which has operations in the Salar de Atacama.
Most recently, Potash West reported the extension of potash and phosphate mineralization south of its Dinner Hill project on May 11.
Other companies that are focused on SOP production include:
- Potash Ridge (TSX:PRK), which acquired Valleyfield Fertilizer in August 2015. Valleyfield is a private company that has been working to advance the development of a SOP project in Quebec. On June 5 2016, Potash Ridge contracted SNC-Lavalin to construct the Valleyfield project.
- Danakali (ASX:DNK), an Australia-based company developing the Colluli SOP project in Eritrea, Africa. Danakali submitted its formal Social and Environmental Impact Assessment for the project on April 27 2016.
This article was originally published on the Investing News Network on August 12, 2015.
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Potash West, Danakali and Gensource Potash are clients of the Investing News Network. This article is not paid-for content.