As farming returns to health, long-term potash demand looking good

T.D. Newcrest's Paul D'Amico suggests investors seeking to gauge the future of potash markets should focus on global corn supplies.

TORONTO - 

T.D. Newcrest minerals analyst Paul D‘Amico warned minerals analysts and investors that potash prices will remain flat for the rest of this year, but may see some price leverage gain next year.

In a presentation to the Prospectors and Developers Association conference Sunday, D'Amico forecast "significant growth of offshore potash demand."

He noted potash inventories are already dramatically correcting this year and with the price hitting $500 tonne in 2011.

The long-term forecast for domestic farm returns are healthy, D'Amico advised.

China, Brazil and India comprise almost 50% of global potash demand.

Meeting potash demand involves a myriad of challenges, including an average capex of C$2.8 million of capital, and a project development timeline averaging five to seven years. D'Amico said the potash supply situation is also complicated by the fact there hasn't been a greenfield potash development in 30 years.

D'Amico estimated that global annual potash demand grows by an average of 3% annually. Top potash importers include China, the U.S., Brazil and India. Only three nations-China, Russia and Belarus-produce two-thirds of global potash supply.

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responses to this article

2.8 million, eh? If it only takes CAPEX of $2.8 million, I think I'll go ahead and build a few Potash mines myself, LOL!!!! And I guess Canada's Potash production isn't worth mentioning China, Russia, and Belarus produces 2/3rds? LOL!!!!!!!!!). by new2thissite on March 08 2010, 21:51 Find this comment inappropriate? Report it

That's some quality reporting 90% of statistics are made up on the spot. by MiningEngineer on March 09 2010, 01:20 Find this comment inappropriate? Report it

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