Turmoil in the Potash World and My Beach Vacation (really)
I’ve always had a kind of personal relationship with phosphates, based oddly enough on my annual trips to the beach. My family has vacationed in Ocracoke, North Carolina for over 30 years. A little island off the tip of Cape Hatteras, Ocracoke is accessible via either the “short” ferry from Cape Hatteras, or one of the “long” ferries from the mainland, leaving either from Cedar Island or Swan Quarter, NC. In years when hurricanes have damaged NC 12, the main road to Cape Hatteras, we take the Swan Quarter ferry. What does this have to do with phosphates (and what is this blog doing in the chemical industry community), you ask?
Swan Quarter is only an hour’s drive from Aurora, NC, home of Potash Corporation’s Aurora Mine, the largest integrated phosphate mining and chemical plant in the world. Also one of the biggest fossil hunting destinations on the East Coast. Since my husband and two sons are avid fossil hunters, I’ve spent more time than I can count sweating bullets in the hot North Carolina sun while the rest of my family digs in the trailings from the phosphate mine. Because on top of phosphate deposits are huge deposits of Miocene era fossils, from sharks’ teeth to walrus skulls.
Due to these family trips, I have a real affection for Potash Corporation, who funds the lovely little Aurora Fossil Museum, as well as allowing fossil hunters occasional access to the main mine site, which is amazing.
For this reason – and now I am getting down to the chemical relevant stuff – I was really sorry to hear about the tumult in the potash market this week. Due to the break up of the Russian potash cartel, potash prices plunged, as did the stock prices of Potash Corporation, Agrium, and Mosaic who together produce about 38% of the world’s supply of the fertilizer. Israel Chemicals and Germany’s K+S also suffered.
The dissolution of the Uralkali/Belaruskali cartel is bad news if you are a potash producer, but good news if you are a farmer. Estimates are that potash prices might decline to $300 or less a ton, down from the current $400, as the Russian producers increase their volume. That means farmers will pay less for this crucial nutrient. But it also means that European and North American potash producers will have to rethink their business processes and focus on profitability. Wonder if SAP might be able to help? I hope so, because I want to go back to the Aurora Fossil Museum on next year’s trip to the beach.
Yeah, and it didn't help one of my investments in UAN either! But they should still be ok. I don't know about the Potash corporation or the others you mentioned. Will be a bit of turmoil for awhile until the export markets and prices stabilize.
Interesting blog! It's nice when companies are willing to let people do things like that. So many times the things kids remember the most are the cheapest things to do, Your kids will be telling their grand kids about the trips "to the mines" and some of those collected fossils, while not necessarily valuable, will become priceless family heirlooms.
I hope the mines can stay open for years to come.
FF
Lauren: Your blog is a very pleasant surprise - since it was not tagged with "mining", I found it by accident, and it was a nice way of summing up some very important trends in the market. Ocracoke is one of my favorite places - lots of happy memories there. Next time I go, I'll be sure to schedule a side trip to go fossil hunting! I'm tagging Perry Zalevsky to weigh in on how SAP can help potash miners be more profitable!
Most potash companies are a combination of Mining and Chemicals companies - they mine it and then they process it, turning it into chemicals for mostly agriculture. As in any commodity-based business, there are ups and downs in pricing - and, then, winners and losers. In this case, the potash producers will feel the pressure since the price dropped rather dramatically in a short period of time. But, whether it's Chemicals or Mining or both, these companies need to be operationally efficient so they can take advantage of good times while still surviving in bad times. And, SAP solutions can help - from ERP to EH&S. Let's hope the Aurora Fossil Museum is as well run as these companies and knows how adapt to changing conditions - although they make their living on history, not the future.