Worldwide, the increasing demand for potash is expected to exceed the current supply. Over the last decade, the potash industry has experienced rapid growth mostly as a result of higher demands for food, feed and fuel.
With an ever increasing world's population, farmers are relying more than ever on potash fertilizer to maximize their yields to satisfy the associated increase in the consumption of food. This soaring global population is resulting in less and less arable land available. This means that the dwindling farm land that is available needs to be as productive as possible, and one of the only ways to achieve this is through fertilization, namely with potash. From 1962 to 2007, global consumption of potash as a fertilizer grew from approximately 10 million nutrient tons to approximately 30 million nutrient tons, according to the IFA. World consumption of potash grew at an annual rate of 2.5% since 1962, 2.7% since 1993 and 3.5% since 2000. If global potash consumption grows at an average rate of 3.5% per year from 2007 to 2011, as estimated by Fertecon, an average of 1.3 million additional tons of K2O will be required every year by potash consumers and capacity additions will be needed to meet this future demand.
In addition, rapidly expanding economies in developing nations, particularly in large countries like India and China, with growth rates of approximately 10% annually, are resulting in increased global wealth. As a result of increased income, larger numbers of people are changing their diets to include more protein. Meat is one of the main sources of this protein which necessitates the use of potash to increase the quality and quantity of feed for livestock. While developed countries have traditionally been the largest consumers of potash, developing countries are the fastest growing markets for potash. Over the next five years, Fertecon estimates that potash fertilizer consumption will grow at an average rate of 6.0%, 4.5% and 4.5% per year in India, Brazil and China, respectively.
Lastly, the increasing demand for bio-fuels in the face of higher oil prices and carbon emissions concerns creates pressure to increase the yield of crops such as corn or sugar cane on ever decreasing agricultural lands. This requires an increased use of fertilizers which often include potash.
The current potash market is estimated at 50 million tons annually, and is projected to grow at 3-4% rate. However with the potash industry struggling to meet new demands, and with no new major projects yet announced, it seems that the gap between the demand for potash and the available supply may continue to widen.