🔋Phrosperous Land

While critical material shortage fears plague western leaders, recent discoveries allow a different story to be painted for the agriculture market.

Jul 05, 2023

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Industrial machine using fertilizer with crops — Food Business News

People today are naturally worried about the materials required for solar, wind, and batteries in effort to decarbonize energy production. While a vital piece to the puzzle of life, energy is not all encompassing. One of the other pieces to this puzzle if you will is agriculture. While the Haber-Bosch process revolutionized the way nitrogen fertilizers are made, phosphorus fertilizers come from a more traditional method. Both elements along with potassium are crucial for industrial crop production where the fields are stripped of their nutrients each year and crops are shipped elsewhere, leaving fields desperate to be replenished.

Phosphate fertilizers come from phosphate rock deposits, where they are first separated/beneficiated, then either grinded or dried/calcined, before finally being transferred to acid production where treated with either sulfuric or phosphoric acid. While phosphorus is one of the more abundant elements in the earth’s crust, being a resource mined in specific locations and so important to food production, people over the years have been worried about its supply. While this worry makes sense taking into account geopolitical strife, the worry for phosphate rock over the years has been largely unfounded in hindsight. A new concern, similar to other industries is the US faltering in its production in the recent decades. Once the major producer, China now accounts for 40% of phosphate rock production to the US’s 11%.

A) Phosphate rock reserves, and B) Phosphate rock production as of 2021. MDPI

The largest phosphate rock deposits in the world are the western Sahara region/Morocco (50 billion tonnes), China (3.2 billion tonnes), Egypt (2.8 billion tonnes), and Algeria (2.2 billion tonnes). Well, that was the case until last week. A new discovery in Norway of all places has led to a reported 70 billion tonnes of new reserves, roughly matching the total current world reserves at the time. With 90% of phosphate rock going toward industrial fertilizers, this new deposit will quell any worries for this type of fertilizer for long after we’re gone. Another use case for phosphate rock relevant to my readers is for Lithium Iron Phosphate (LFP) cathode material for Li-ion batteries, where similar worries were creeping in.

LFP precursors are lithium carbonate and depending on the synthesis method, iron phosphate or other iron and phosphate materials. Either type is dependent on phosphate rock production, and the new Norwegian supply will help lower costs, especially for western nations like Europe and the US. The main draw to use LFP is the cost and raw material advantage over the more energy dense oxide materials (NMC, NCA). This is the case as there is no need for cobalt, nickel, or manganese supply for LFP based batteries. As you can see from the table below, lithium carbonate is the dominant raw material cost for either synthesis type in the Chinese market. This is true also in the downstream prices for batteries as shown by Intercalation Station in a recent piece showing the correlation between battery prices and lithium carbonate.

Returning to the fertilizer topic, nitrogen fertilizers on the other hand are supplied in three forms: ammonia, nitrates, and urea. Natural gas is required for the cost effective use in supplying hydrogen for ammonia production via the Haber-Bosch process. This is criticized for its carbon emissions, but to date no other method including water electrolysis comes close in terms of cost. Unsurprisingly, the top three producers of ammonia are China, Russia, and India. However, the US is fourth and supplies nearly 90% of its domestic consumption (2019).

A) Ammonia production by country in tons. NationMaster B) Breakdown of US ammonia supply. EPA

Potash, or the name given to potassium containing salts is the third major ingredient to the fertilizer puzzle. Ancient underground seas provide the best reserves due to the high salt content. Potash is produced mainly through underground/shaft mining or solution mining since reserves tend to be deep below earth’s surface. Then the ore undergoes grinding, separation, floatation, sizing, and separation. There aren’t many concentrated surface sources of potassium salts other than the great salt lake/similar lakes and South American salt flats where potash is a bi-product from lithium production. Fortunately for the US, Canada is the largest producer of the material, where almost all of US supply comes from the North American continent.

World's Largest Fertilizer Maker Boosts Capacity as Prices Soar - Bloomberg — Bloomberg

Overall, the industrial fertilizer market paints a different picture than what is seen for battery metals or rare-earth metals moving forward. Regardless of the carbon footprint of these methods used and the viability of any organic farming replacements which have largely been met with protest or unrest, it is realistic to expect that the reliance on industrial fertilizers to feed the world will last for some time. With the phosphate rock discovery in Norway, domestic ammonia production capabilities, and potash supply in Canada, the US does not have the same geopolitical risk as it does with other materials. With the more secure fertilizer supply to go along with its extensive agriculture production capacity, the US can rest easy knowing its food supply doesn’t share the same risks its energy supply does. Until next week,

-Grayson

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