Potash Emerges as an Important Component for Global Food Production

FinancialBuzz.com News Commentary

NEW YORK, Aug. 15, 2023 /PRNewswire/ -- Potash is used in a wide variety of areas and most commonly refers to a group of potassium-rich minerals and chemicals. It is the vital ingredient to produce fertilizer and is widely used in the agricultural industry to boost crop yields and support plant growth. The most common type of potash is Muriate of Potash (MOP) derived from potassium chloride (KCI). It accounts for approximately 95% of the global agricultural potash. Potash also helps to improve the quality of crops by enhancing their flavor, color, and texture. As a result, the market value projections for potash are positive, with the global demand for potash expected to increase due to the growing population and the need for increased food production. Overall, according to data published by the Business Research Company, the global potash market size will grow from USD 22.04 Billion in 2022 to USD 23.03 Billion in 2023, while at a compound annual growth rate (CAGR) of 4.5%. Sage Potash Corp. (TSX-V: SAGE), The Mosaic Company (NYSE: MOS), Intrepid Potash, Inc. (NYSE: IPI), Nutrien Ltd. (NYSE: NTR), ICL Group Ltd. (NYSE: ICL)

In regards to the process of potash mining, it is mined from underground or brough to the surface via solution mining. During the traditional underground mining process, tunnel boring machines are deployed to dig out the raw ore, which is then transported to the processing mill at the ground level, where it's crushed and refined to extract the potassium salts from the potash. If the deposits are located very deep in the earth, solution mining will be used as an alternative. This method includes injecting a heated mixture of water, magnesium and other salts called brine, deep below the earth's surface to dissolve the potash deposits. The solution is then pumped up to the surface and the minerals are cooled down in crystallization ponds where the potash is separated and conditioned.

Sage Potash Corp. (TSX-V: SAGE) just announced breaking news that, "it has achieved an essential milestone in its operational roadmap. The Company has obtained regulatory approval from Utah's Department of Natural Resources Division of Water Rights for the Fixed-Time Application that grants Sage Potash permission to withdraw up to 0.207 cubic feet per second (CFS) or 150 acre-feet of brackish water annually, effective until July 31, 2043. Water will be procured from the proposed access well for extraction and year-round use within the entire Sage Plain Potash Project, consisting of over 88,000 acres of mineral leases and permit applications in Utah's Paradox Basin, with 2 potash beds and an inferred resource of 279.5 MMT high-grade potash.

Water rights play a crucial role in the development of solution-based potash projects, as they ensure a sustainable supply of water for extraction purposes, which is essential for the efficient and environmentally-friendly extraction of potash. In its commitment to aligning economic growth with environmental sustainability, Sage Potash Corp emphasizes that its planned operations will not impact traditional sources of irrigation, agricultural, or potable water. Instead the company will utilize brackish water, which is primarily composed of salt and other minerals, rendering it unsuitable for conventional uses.

Peter Hogendoorn, CEO of Sage Potash, commented 'In any resource project, one of the biggest risks to advancement beyond exploration, is permitting. Receiving water/brine access rights is a key step in de-risking the Sage Plain project since there can be no production without water. We are advancing numerous permit applications and are extremely pleased with the support we are receiving from the various Utah state agencies involved.'"

The Mosaic Company (NYSE: MOS) through its subsidiaries, produces and markets concentrated phosphate and potash crop nutrients in North America and internationally. Earlier in June, the Company announced its combined April and May 2023 sales volumes and revenue by business unit. For the second quarter, Mosaic expects potash sales volumes toward the high end of the previous guidance range of 2.0-2.2 million tonnes, reflecting the impact of strong spring demand in North America. For pricing, Mosaic now expects realized MOP prices at the mine near the low end of our previous range of $325-$375 per tonne. The company's updated pricing guidance incorporates the recent China contract settlement of $307 per tonne. In Phosphates, Mosaic expects sales volumes to be near the low end of our previous guidance range of 1.8-2.0 million tonnes. Following strong demand for the spring season, North American customers are deferring inventory restocking to the third quarter. Realized DAP prices on a FOB basis are expected at the high end of our previous guidance range of $550-$600 per tonne. Results for the quarter are expected to reflect the capture higher-priced sales early in the quarter.

Intrepid Potash, Inc. (NYSE: IPI) reported earlier this month its results for the second quarter of 2023. Total sales of $81.0 million, which compares to $91.7 million in the second quarter of 2022, as potash and Trio® average net realized sales prices decreased to $479 and $333 per ton, respectively. Potash and Trio® sales volumes of 79 thousand and 63 thousand tons, respectively, which compares to prior-year figures of 56 thousand and 59 thousand, respectively. Intrepid is a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed, and the oil and gas industry. Intrepid is the only U.S. producer of muriate of potash, which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed.

Nutrien Ltd. (NYSE: NTR) announced last month that it has curtailed production at its Cory potash mine due to the loss of export capacity through Canpotex's Neptune terminal as a result of the International Longshore and Warehouse Union (ILWU) Canada strike at the Port of Vancouver. Nutrien expects full-year 2023 Potash adjusted EBITDA will fall below the bottom end of its previous guidance range due to factors impacting offshore sales through Canpotex, including the ILWU strike, Portland terminal outage and lower global potash prices than previously anticipated. We will provide updated full-year 2023 guidance reflecting these impacts at the time of our second quarter results on Wednesday, August 2, 2023. "The disruption at the Port of Vancouver has resulted in the curtailment of production at our Cory potash mine and if prolonged could also impact production at our other potash mines in Saskatchewan. We urge the parties in this dispute to come to a swift resolution to prevent further damage to the Canadian economy," said Ken Seitz, Nutrien's President and CEO.

ICL Group Ltd. (NYSE: ICL) provided an updated back in June regarding its 2022 to 2024 framework agreement with its customers in China. The company has agreed to supply those customers with an aggregate amount of 800,000 metric tons of potash during 2023, with mutual options for an additional 350,000 tons. The agreed upon price is $307 per ton, which aligns with recent contract settlements. ICL Group is a leading global specialty minerals company, which creates impactful solutions for humanity's sustainability challenges in the food, agriculture and industrial markets.

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