February 24, 2012

 

Mosaic to boost sales of specialised fertiliser

 

 

Mosaic Co. plans to increase sales of its proprietary fertiliser MicroEssential by 67% to 2.5 million tonnes in the next few years, Chief Executive Jim Prokopanko said Wednesday (Feb 22).

 

The product can boost crop output by at least 2.2 times by supplying a blend of zinc, phosphate, sulfur, nitrogen and other nutrients in tiny capsules, he said.

 

MicroEssential accounts for just a sliver of company profits at present, but offers richer margins than the other commoditised fertilisers on which Mosaic currently depends for the bulk of earnings, Prokopanko explained.

 

The Plymouth, Minnesota-based Mosaic is in the midst of a US$5-billion expansion of its potash capacity, which it hopes to boost to 15 million tonnes from 10 million tonnes.

 

The company is also beginning the permitting process for two expansion permits at additional Florida mines it owns, a process that is expected to take six years.

 

Phosphate and potash are the second- and third-most important fertilisers, respectively, for farmers, after nitrogen. Potash prices are trading around US$559 per tonne, down from a three-year high of US$773. Phosphate prices are trading near US$480 per tonne, down from a three-year high of US$588.

 

Mosaic is considering spending US$1 billion to build a nitrogen plant on the US Gulf Coast to produce ammonia, a key ingredient in phosphate fertiliser.

 

The company currently makes 500,000 tonnes per year of ammonia, and buys an additional one million tonnes. In-house production of all its ammonia needs would be a boon to annual earnings, which slide US$78 million each time ammonia prices increase by US$25/tonne.

 

Meanwhile, it is looking outside North America for long-term growth, mirroring similar steps from Norway's Yara International ASA, the largest fertiliser producer in the world, and CF Industries.

 

Prokopanko sees the biggest potential in India, where the government subsidises some fertiliser purchases, but not MicroEssentials.

 

"We are working with the government in India to have this qualify for the subsidy," he said. "So far, it's having a strong impact. Farmers are finding they can justify paying the price."

 

Latin America and China's markets also offer growth potential, he said, but the CEO was less keen on Africa - mostly because Yara already has a developed nitrogen fertiliser network in eastern Africa and Morocco has one of the world's largest phosphate fertiliser reserves.