Potash is the name for the group of minerals that provide potassium to plants for stimulating growth. Essentially a potassium-rich salt, potash is used as a fertiliser. It is extracted from deep underground deposits that formed millions of years ago as the sea evaporated from inland seabeds, leaving layers of common salts behind. It plays a vital role in improving the quality and yield of modern agricultural production.

With a growing global population and increasing income levels in developing economies, the demand for potash is intensifying. Sustainable increases in crop yields across a limited amount of arable land will require the increased use of potash fertilisers as a critical element in soil replenishment.

Origins, prevalence and the absence of mineralisation
The word potassium is derived from ‘potash’, which is made up of a naturally occurring mix of potassium chloride (KCl) and sodium chloride (NaCl – ie table salt).

Global potash resources are inconsistent and unevenly distributed, with deposits differentiated by the presence of several micro-nutrients. Most underground deposits require shaft extraction to depths of up to 1.4 km. The largest deposits are found in Saskatchewan, Canada, also currently the largest source of global annual potash production (at 32%). The next largest suppliers are Russia and Belarus, accounting for 17% of production apiece.

Australia, along with much of Africa, reportedly lacks potash deposits due to the absence of mineralisation in these regions. This is ascribed to one of four factors:
• The age of the basin rocks – potash is less likely to be preserved in Precambrian¹ and early Phanerozoic² rock sequences.
• The degree of metamorphism³ – potash deposits are less likely to be preserved during metamorphism, which occurred primarily due to heat, pressure and the introduction of chemically active fluids.
• A wet climate – may have inhibited conditions necessary for the initial deposition of potash or destroyed near surface deposits.
• Lack of potash exploration – many known deposits were discovered by chance while exploring for petroleum.

Nutrient balance optimises growth
Over 90% of harvested potash is used for fertiliser, with the remainder used in industrial processes such as aluminium recycling, metal electroplating, oil well drilling and medicine.

Fertilisers are made by combining specific nutrients for plant absorption to ensure optimal growth – categorised into macro-nutrients (needed in large quantities) and micro-nutrients.

Macro-nutrients include nitrogen, phosphorous and potassium (often referred to as N-P-K), and sulphur, magnesium and calcium. The key benefits of N-P-K usage are:
• Nitrogen increases plant yield by promoting protein formation that is essential for growth and development in plants.
• Phosphorous plays a key role in photosynthesis and is crucial for healthy root development.
• High levels of potassium in the soil help crops withstand stressful conditions (extreme temperatures, disease and pests). In the case of soil deficiencies, potassium is added to boost crop yields and improve overall plant health (preventing wilting, strengthening roots and stems, and assisting with nutrient transferral). Potassium also activates enzymes to ensure plants absorb water efficiently.

There are various micro-nutrients, such as copper, chloride, manganese, zinc and boron, that support plant growth but are not needed in large quantities. High concentrations of chloride can prove toxic to certain plants, therefore low chloride fertiliser is particularly useful for high value commodities like tea and coffee.

¹_{Covers the period that occurred 4.5 billion to 542 million years ago.}
²_{Geological eon during which abundant animal life existed and diverse hard-shelled animals first appeared.}
³_{The change of minerals or geologic texture in pre-existing rocks, without them changing state ie melting into liquid magma.}

MOP, SOP and Poly4
The chart below illustrates the various potassium-bearing fertilisers available. The most common is muriate of potash (MOP), which constitutes more than 85% of the market. MOP is predominantly used on bulk crops, such as maize, that can withstand high levels of chloride.

Sulphate of potash (SOP) is considered premium quality given that it contains less potassium than MOP, is low in chloride and contains sulphur (an additional macro-nutrient). SOP improves crop yields and quality, building plants’ resilience to drought, disease and pests. It is used on high value crops, such as tea, coffee and fruits.

Poly4 is the trademarked name for Anglo American’s polyhalite product, which is a multi-nutrient, low chloride fertiliser. Unlike SOP, which is chemically produced in a metallurgical processing facility, polyhalite occurs naturally and has a higher calcium content than other potash deposits. Poly4 is a higher value SOP substitute containing four of the six essential macro-nutrients required for plant growth, with added micro-nutrients. Importantly, it is associated with far lower carbon emissions than other fertilisers.

Polyhalites currently make up a small portion of the potash market share (around 2.5%) and are only mined in England. They formed during the evaporation of prehistoric seas around 260 million years ago, where hot and dry conditions caused the sea to evaporate before it could be replenished, leaving behind potash minerals. This known as ‘The Great Dying’, a Permian-Triassic⁴ mass extinction that wiped out nearly 90% of the species on the planet – including 96% of ocean dwellers and 70% of terrestrial animals.

⁴_{An extinction event during the period of the Palaeozoic era.}

Fertilise to feed a burgeoning population
The global demand for potash is linked to the rising demand for food. As populations grow, the calorie intake needs per capita increase, whereas the availability of arable land remains finite (charted below). By improving agricultural yields and supporting soil replenishment, fertilisers can help address this imbalance.

According to the United Nations, the global population is expected to grow by 33% between 2015 and 2050, with the middle class growing by 53% between 2020 and 2030. The OECD estimates that agricultural production needs to increase by 60% between 2010 and 2050 to meet the resulting rising food demand. An escalation of this scale would exacerbate existing imbalances and cause a surge in fertiliser demand.

While fertilisers are currently more commonly used in developed countries, high economic growth in developing countries underpins the rise in food demand, particularly protein-rich diets. This will result in increased grain production for animal feed and an incrementally greater demand for fertiliser.

Fertiliser and potash prices are linked to agricultural commodity prices. As shown in the chart below, the potash market is currently oversupplied and we expect this dynamic to persist over the next three to five years as developing country food demand accelerates.

We believe the long-term outlook for potassium-based fertilisers is robust and our clients have some exposure to this commodity. Firstly via Anglo American, which has recently acquired a Poly4 production project (Woodsmith Mine in the United Kingdom). Secondly via Omnia, which is South Africa’s leading fertiliser producer and is well positioned for agricultural growth in Africa.