As the world’s population continues to grow, so too do the number of mouths needing to be fed. As a result, it is becoming increasingly important for farmers to grow more crops more efficiently.
That’s where potash 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).
For investors interested in the potash space, it’s important to know the difference between these two types of potash fertilizers. Read on for an explanation of their common uses, as well as a look at methods of producing them and which companies are doing so today.
Potash fertilizer: Muriate of potash
MOP, or potassium chloride, is the most commonly used potash 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.
There are some drawbacks to this kind of potash fertilizer. For example, if high levels of chloride are present in the soil or irrigation water is being used to grow crops, adding MOP can create toxicity. That means levels of the fertilizer have to be carefully managed, and MOP must only be used for select crops.
Still, MOP remains the most popular potash fertilizer, with over 55 million tonnes being sold and used annually. Having said that, the popularity of MOP in recent years has led to production that outpaces demand, resulting in lower-than-desired prices for the product. The market remained challenging in 2017, but key participants said the year was an improvement compared to 2016.
Nutrien (TSX:NTR,NYSE:NTR), a company formed by the merger between Potash Corporation of Saskatchewan and Agrium, is a major producer of MOP, but because the fertilizer is so crucial in the world today, many smaller companies are also exploring for the material.
For example, Highfield Resources (ASX:HFR) is a MOP exploration company that currently has five potash projects in Spain. It continues to advance its Muga potash project, and said in its latest quarterly activities report that it made “[s]ignificant progress” during the period.
Saskatchewan-based Western Potash, a subsidiary of Western Resources (TSX:WRX), is pursuing MOP as well at its Milestone project. Gensource Potash (TSXV:GSP), which is also based in Saskatchewan and focused on MOP, has established a joint venture with an Indian conglomerate to develop the Vanguard One project — a small, scalable potash production facility in Central Saskatchewan.
Potash fertilizer: Sulfate of potash
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 improve the look and taste of foods and can improve a plant’s ability to absorb essential nutrients like phosphorous and iron.
Most often SOP is 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 is not a naturally occurring mineral, and usually must be produced through chemical methods. Because of the resource-intensive processes used to create it, SOP is priced higher than MOP.
The most common method used to produce SOP is called the Mannheim process. It involves pouring raw materials into a muffle furnace that is heated above 600 degrees Celsius, creating a reaction between potassium chloride and sulfuric acid. It accounts for roughly 50 to 60 percent of global SOP supply.
The next most common way to produce this type of potash fertilizer, accounting for about 25 to 30 percent of supply, is by reacting potassium chloride with various sulfate salts to form what is called a double salt. “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,” explains Kalium Lakes (ASX:KLL) on its website.
“The glaserite is separated and treated with fresh MOP brine, decomposing into potassium sulfate and sodium chloride,” it continues.
There are also operations that produce this type of potash fertilizer by using salt mixtures from natural brines. This requires brine with high sulfate levels, typically found in salt lakes. Australia-based Agrimin (ASX:AMN) is known for this type of production and owns the largest mineral resources of brine-hosted SOP in the world at its Mackay project. Other companies able to use naturally occurring brines are Compass Minerals International (NYSE:CMP), which operates out of Overland Park in Kansas, and Chile’s Sociedad Quimica y Minera (NYSE:SQM), which has operations in the Salar de Atacama.
Additional potash fertilizer companies that are focused on SOP production include: Crystal Peak Minerals (TSXV:CPM), Danakali (ASX:DNK), Potash Ridge (TSX:PRK), Reward Minerals (ASX:RWD) and Salt Lake Potash (ASX:SO4). Which type of potash fertilizer company would you invest in and why?
All companies listed in this article had market caps of over $10 million as of April 11, 2018. If you think we missed a company that should be included, please let us know in the comments. And don’t forget to follow us @INN_Resource for real-time updates!
This is an updated version of an article originally published by the Investing News Network in 2015.
Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Danakali is a client of the Investing News Network. This article is not paid-for content.