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IFDC
FOCUS ON FERTILIZERS AND FOOD SECURITY
The growing sinkhole that
threatens the Silvinit mines near Berezniki, Russia, is now
200 meters deep and 80 m long. The sinkhole threatens to
swallow the only rail line serving the mines, which supply
10% of the world’s potash. Photos courtesy of English
Russia,
http://www.englishrussia.com
The expanding sinkhole first
appeared in 1986 near the town of Berezniki, Russia, when a
nearby potash mine flooded and began collapsing. It now
threatens to swallow the only rail line that links the
nearby Silvinit company’s mines in the Perm Region of Russia
with the Trans Siberian Railway, Reuters reported on July
14. That would disrupt the supply of potash from the
Silvinit mines. Silvinit ships about 15,000 metric tons of
potash daily on the rail line and supplies about 10% of the
world’s potash.
The sinkhole is about 80 meters
(m) long, 40 m wide, and 200 m deep.
The sinkhole is now only about
100 m from the track. If it reaches within 75 m of the rail
line, the line will be closed and potash shipments virtually
halted.
“Unless the sinkhole slows its
progress, it could reach the rail line by November,”
Silvinit spokesman Anton Subbotin told Reuters.
The Russian government has
plans to build a new rail spur to move potash from the
Silvinit mines to the main rail line, Reuters reported. But
that might require a 2–3 month shutdown of the current line.
The sinkhole is now 100 m
from the rail line. If it reaches within 75 m,
the lines will be closed and potash shipments halted.
Photos courtesy of English
Russia,
http://www.englishrussia.com
“We will do everything we can
to build a new rail line before the old one is closed,” said
Sergei Testov, Chief Engineer of a power company near the
sinkhole. “At best, there will probably be a disruption of
at least 3 weeks. But that is better than 2 to 3 months.”
The threat to Silvinit’s potash
output has prompted worldwide producers to halt new
contracts, Reuters reported. The tighter potash supplies
could cause additional price increases.
Strike in Canadian Potash
Mines
A strike at three potash mines
in Canada “could mean shortages and spiking prices in a
market that is already too tight for comfort,” Reuters
reported on August 8. About 500 workers—members of United
Steelworkers union—are striking against the world’s largest
fertilizer producer: the Potash Corporation of Saskatchewan
(PCS). The workers walked off the job in July 2008.
Contract negotiations were still stalled in mid-August.
The three mines represent 18%
of Canadian potash production and 6% of the world’s
production, according to Reuters.
The world’s potash production
was estimated at 49−50 million tons/year, according to the
International Fertilizer Industry Association (IFA). Canada
produced about 17 million tons in 2005.
Reportonbusiness.com reported
on July 25 that PCS supplies about 10 million tons of potash
yearly, and North American potash inventories are 41% lower
than their 5-year average.
Plants need the potassium in
potash to maintain solute movement and to improve resistance
to stresses and diseases. Potassium is also needed for seed
maturation and fruit quality, according to IFDC’s A Guide to
Fertilizer Products for Traders (FSR-12,
http://www.ifdc.org/New_Layout/Publications_Catalog/index.html).
Analysis
Since 2000, demand for potash
has grown more than twice as much as growth in production
capacity, according to a PCS report.
“There is virtually no slack in
the international potash market,” said Barrie Bain, Director
of the fertilizer consultancy firm Fertecon, Ltd. in an
interview published by Reuters on August 8.
China is the world’s largest
consumer of potash, using about 9 million tons yearly,
according to IFA. China’s potash production is only 2.5
million tons/year.
Hong Kong-based Sinofert
Holdings, Ltd., China’s largest distributor of imported
fertilizers, expects a shortage of as much as 3 million tons
of potash this year, according to Reuters in a mid July
report. Company officials say fertilizer imports fell by
about half in 2008. China could have a shortfall of up to
25% of its normal potash needs this year. Sinofert is
negotiating 2009 potash needs with suppliers and expects
prices to more than triple this year.
“We expect the tight supply of
potash around the world to remain at least through 2009,”
said Harry Young, Sinofert Senior Vice President, in the
Reuters article.. “We will try to secure our 2009 import
contracts at an early date.”
The disruption in potash supply
as a result of the Canadian strike, coupled with the
sinkhole threat to Russia’s potash output, could push potash
prices to record highs by late 2008. Potash has already
increased to $1,000/ton in some regions. Most major potash
companies have sold most or all of their supply and few new
contracts are being negotiated.
Implications are important for
both agricultural producers and potash companies. Rising
potash prices and threats of supply shortages are straining
farmers’ capacity to produce at economical levels. At the
same time, potash companies are faced with opportunities—as
well as market pressures—to increase potash supply to meet
rising global demand.
Solutions
As fertilizer prices soar, more
research is needed to develop new practices that will help
farmers use all fertilizers more efficiently.
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