Major potash miners continue to express confidence about the global market for the fertilizer, suggesting a bright outlook is in the cards for the rest of 2017.
At the beginning of June, BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) said it sees global demand for potash growing by 2 to 3 percent each year through to 2030. According to the company, demand will be driven by an increase in the world’s population, which will fuel crop demand growth of 50 percent by 2050.
In May, BHP Billiton said it could ask for board approval for its Jansen potash project in Saskatchewan as early as June 2018. Last week, the K+S-owned (ETR:SDF) Bethune mine produced its first tonnes of marketable potash in the province.
Potash spot prices have held steady through May and June at $214 per MT. However, they are down from $224, where they were at the end of 2016. Some analysts have expressed concern about oversupply; however, like BHP, other miners have expressed optimism about demand. For example, PotashCorp (TSX:POT,NYSE:POT) has said it expects potash demand to exceed supply in 2017.
Potash juniors sign offtake agreements
It’s not only big companies that have a positive outlook for potash. Numerous juniors are working in the space, and on Monday (June 19), two signed offtake deals for projects they are working on.
Australian Potash (ASX:APC) signed a second memorandum of understanding (MOU) to supply up to 100 kilotonnes per year of sulfate of potash (SOP) to Hubei Agricultural Means of Production Group. The company has another offtake MOU with Sino-Agri Holdings Company.
Meanwhile, Potash Ridge (TSX:PRK) announced that its Quebec-based subsidiary, Valleyfield Fertilizer, has signed an offtake agreement with a leading fertilizer distribution company for up to 10,000 tonnes of SOP per year. That adds up to about 25 percent of the company’s annual SOP production.
Other recently active potash companies include privately owned Michigan Potash Company. In late May, it proposed the creation of a $700-million potash extraction and processing operation that would develop a deposit discovered in 2013. The company is positioning itself as a “local choice” that would allow farmers to decrease their dependence on imported material from large international conglomerates.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.