KLL

Potash

Fertiliser Overview

Fertilisers are compounds of nutrients given to plants in order to promote growth. The three primary macronutrients essential for plant growth are nitrogen (N), phosphorus (P), and potassium (K). Secondary macronutrients include calcium (Ca), magnesium (Mg) and sulphur (S). There are also micronutrients which benefit plant growth, including boron (B), copper (Cu), chlorine (Cl), cobalt (Co), manganese (Mn), molybdenum (Mo), nickel (Ni) and zinc (Zn). These nutrients, or fertilisers, are applied through the soil for uptake by plant roots or by foliar spraying for uptake through leaves.

Agronomists have labelled potassium the regulator because of the key role it plays in controlling critical plant processes such as photosynthesis, protein formation, enzyme activation and starch formation. Potassium is vital for healthy plant metabolism and promotes the development of strong roots, stalks and stems. It is also understood to regulate the plant’s water content and expansion. As a consequence, potassium increases the resilience of a plant to weather stressors such as variable temperatures, drought and high winds. Potassium also boosts disease and pest resistance and is often called the quality nutrient because it enhances the appearance, taste, nutritional value and shelf life of the harvested crop.

Fertilisers are coming into focus as higher yields are required from cropping in order to feed the global population. This is driven by population growth, and an associated decline in arable land. The United Nations publication, World Population Prospects: The 2012 Revision, predicts that the global population is expected to rise from a world population of 7 billion to 9.6 billion by 2050 and to around 11 billion by 2100. This rapid expansion is expected to place an increasing demand for food production on an already overburdened agricultural industry. Further, as the population rises and urban areas expand, a reduction in arable land per person available for agriculture ensues. To meet this decrease in arable land per capita and increased demand from a rising world population, farmers are required to apply more fertilisers to increase crop yields and replace nutrients used during the cropping cycle. This equates to increased demand for fertilisers in the near future and continuing for the long term.

Potash

Potash is available in various forms:

Potassium Chloride (KCl or MOP)
Potassium Chloride, commonly known as MOP, is the most abundant form of potash and thus is the most commonly utilised potassium fertiliser. It consists of 60% K2O and 47% Cl. It is particularly effective when used in the commercial cultivation of the carbohydrate crops including wheat, oats, and barley. MOP is composed of potassium and chloride in the forms of charged atoms, and therefore in the form of a salt which is soluble in water. Chloride can however be harmful to some sensitive crops and detrimental in acidic soils. MOP has a total global market size of approximately 55-60 million tonnes per annum.

Potassium Sulphate (K2SO4 or SOP)
Potassium Sulphate, commonly known as SOP, is the second major form of potash. It consists of 50% K2O and 17.5% S. It is particularly effective in the cultivation of fruits, vegetables, berries, potatoes, beans, cocoa, tobacco and tree nuts. SOP contains less than 1% chloride, but importantly does contain sulphur which is a secondary macronutrient utilised by the plant for growth. Sulphur deficient soils are a growing problem within the agriculture sector. As such SOP attracts a price premium over MOP of between 40% to 100%. SOP has a total global market size of approximately 6 million tonnes per annum.

Potassium Nitrate (KNO3)
Potassium Nitrate is a speciality form of potash. It consists of 44% K2O and 13% N. It is used in crops that are sensitive to chloride and require the addition of nitrogen. Potassium Nitrate has a total global market size of approximately 1.4 million tonnes per annum.

Sulphate of Potash Magnesia (SOPM)
Sulphate of Potash Magnesia is a speciality fertiliser. It consists of 28% K2O and 10% MgO, and 16% S. It is used in high value crops. Sulphate of Potash Magnesia has a total global market size of approximately 1.3 million tonnes per annum.

SOP vs MOP

SOP is superior to MOP because it does not contain chloride, which has a toxic impact on many food plants, especially fruits and vegetables. When MOP is used, soils have increasing levels of chloride salt which impact plant yields. Chloride-free fertiliser enhances plant health, so the demand for SOP is increasing. In addition, SOP has a lower salinity index than MOP. The higher salinity of MOP can cause plants to have difficulty absorbing water and nutrients from the soil thereby diminishing the quality and yield of the crop. SOP has a salinity index of 46, the lowest of the potassium fertilisers, while MOP has a salinity index of 116. For these reasons, producers of high value crops prefer and use SOP over MOP.

Sulphate of Potash Production Methods

Sulphate of Potash (SOP) is not a naturally occurring mineral and primary SOP production requires extracting potassium and sulphate ions from naturally occurring complex ores or brines, via evaporation and/or chemical methods. There are three primary methods for production:

  • Salt Lake Brine Processing
  • Potassium Chloride and Sulphate Salts Reaction
  • Mannheim Process

Salt Lake Brine Processing

Processing of natural Brines is a relatively low-cost option, but is limited because of the small number of salt lakes in the world that contain both potassium and sulphate. There are Brine operations in Utah (Great Salt Lake Minerals Corporation, owned by Compass Minerals International), Chile (Salar de Atacama, owned by SQM), and China (with the largest producer being SDIC Xinjiang Luobupo Potash).

This method requires Brines with high sulphate levels such as those found within these salt lakes. The sulphate is typically present in the harvest salts in the form of the double salt kainite, which is converted to schoenite by leaching with sulphate Brine. The leach process is hampered by sodium chloride content in the harvest salts and the halite is first removed by flotation. After thickening, the schoenite is decomposed by simply adding hot water, whereupon the magnesium sulphate enters the solution leaving SOP crystals. This process is currently the lowest cost method to make SOP. As lakes with sufficient Brine mineral levels are rare, this method only accounts for 15% to 20% of global supply. The average cost of production from salt lakes is approximately US$200 per tonne.

Potassium Chloride and Sulphate Salts Reaction

Potassium chloride can be reacted with various sulphate salts to form a double salt that can be decomposed to yield potassium sulphate. The most common raw material employed for this purpose is sodium sulphate. Sodium sulphate, either in the form of mirabilite (also known as Glauber’s Salt) or sulphate Brine, is treated with Brine saturated with MOP to produce glaserite. The glaserite is separated and treated with fresh MOP Brine, decomposing into potassium sulphate and sodium chloride. There are only a few operations in the world with K+S Kali and Rusal being the key producers utilising this method. These methods of production are the second greatest source of global supply at 25% to 30%. The average cost of production via the sulphate salts reaction method is approximately US$300 per tonne.

Mannheim Process

The most common method of producing potassium sulphate is the Mannheim process, which is the reaction of potassium chloride with sulphuric acid at high temperatures. The raw materials are poured into the centre of a muffle furnace heated to above 600ºC. Potassium sulphate is produced, along with hydrochloric acid, in a two-step reaction via potassium bisulphate. There are a number of operations in the world with Tessenderlo Group and Chinese private producers being the key producers utilising this method.

This method for creating SOP accounts for 50% to 60% of global supply. The Mannheim process is also the most expensive of the processing techniques due to the high input costs associated with purchasing MOP and sulphuric acid. The biggest variable influencing the long-term viability of the Mannheim process remains a long-term economic off-take for the hydrochloric acid. Around 70-80% of Mannheim production costs is the cost of MOP. Average production cost via the Mannheim process is approximately US$400-550 per tonne.

Kalium Lakes Potash Market Analysis

Kalium Lakes has conducted a review of the potash market utilising leading industry market research reports and has formed the view that whilst the MOP market is well supplied, the premium SOP market remains undersupplied. It is notable that there is no commercial production in Australia which consumes a combined total of ~420ktpa MOP and SOP being the most recent figures for 2017. Given these factors, Kalium Lakes is of the view that an opportunity exists to capture the Australian supply market for SOP with opportunities to extend into Asia and the sub-continent. Current retail pricing in Australia is more than A$1,050/t SOP.

It is noted that existing Brine hosted SOP producers are comparatively low cost when compared to secondary Mannheim SOP producers as detailed in leading industry market research reports. Refer to the Independent Expert’s Report for further information. With an ongoing increase in world population, an ever decreasing arable land per capita, continued economic growth in developing economies and degradation of soils worldwide, a continuing demand for the key plant nutrients of Nitrogen, Phosphorous and Potassium, supports the supposition that world fertiliser demand is forecast to continue to rise.

Based on this outlook, the Board is of the view that it is likely to see strong demand for its SOP product with potential market upside from co-products including Magnesium Sulphate (MgSO4 or Epsom Salts) and Magnesium Chloride (MgCl2 or Bischofite) and Magnesium Hydroxide (Mg(OH)2) which Kalium Lakes believes could be produced from the Beyondie Potash Project Brine.