Africa expected to lead potash demand in 10 years

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Rising global demand for foodstuffs, including grain-intensive meat and dairy products, fruits, vegetables and specialty crops, will ultimately translate to rising global demand for fertilizers, including potash products such as muriate of potash (MOP) and sulphate of potash (SOP), according to a new report.

Potash Investing News issued a long-term report of potash prices indicating that an increase in the middle class around the globe will lead the increase in demand for more meat and dairy products. One of the ways to meet this demand is for more potash fertilizer.

Looking further down the road, the expansion of farming in many African nations is positioning the region to one day become an important global supplier of foodstuffs, sector analysts told Potash Investing News. “We submit Africa too has the potential to provide the world with significant food resources,” said Robert Winslow, an analyst with National Bank Financial, “though political risk and infrastructure deficiencies are apt to delay that potential for many, many years.”

Currently, Africa uses around 400,000 tonnes of potash annually. However, rising agricultural activity on the continent over the next 10 years will translate into an absolute explosion in potash demand in the coming years, said Richard Kelertas, senior vice president of corporate development at Allana Potash, which is developing its Dallol potash project in Ethiopia. Allana has targeted production at Dallol for the second half of 2014, with a planned initial capacity of 1 million tonnes of MOP per year.

“Our estimation is that Africa is going to be using anywhere from 1 to 2 million tonnes of potash annually over the next five years and 4 to 6 million tonnes over the next 25 years. The region could be one of the biggest potash users outside of North America and Europe, perhaps even reaching the same level as India and China,” Kelertas told Potash Investing News.

One of the countries that may be able to help Africa with its demand for potash in the future could be Latin American countries, Brazil in particular.

“We believe Latin America, in particular Brazil, will be a critical piece of the food security puzzle in the years and decades ahead,” Winslow said in an interview.

Brazil is already the world’s third-largest potash consumer. The nation imports approximately 90 percent of its potash needs. Although Brazil can potentially develop domestic potash supplies, it lacks the necessary infrastructure, meaning as it aggressively expands its agricultural capability it will continue to be a major factor in global potash demand.

To read the full report, click here.  

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