This is an updated version of an article originally published on Potash Investing News on February 13, 2013.
Potash and phosphate are both used to produce fertilizers, which are becoming increasingly important as demand for food grows.
However, their roles in crop growth are different, and they cannot be used interchangeably. That’s because potash and phosphate are often precisely applied to meet the specific requirements of a particular crop, climate, soil type or topography.
For investors interested in fertilizer companies, it’s worth being aware of the difference between potash and phosphate. Having that knowledge can help guide investment decisions and ultimately lead to increased profitability. On that note, here’s a basic breakdown of the difference between potash and phosphate.
Potash is a potassium-based product that is often bonded to other chemicals. It is predominantly used as a fertilizer to encourage water retention in plants, increase yields, improve taste and help plants resist disease. The two most common potash fertilizers are sulfate of potash (SOP) and muriate of potash (MOP).
The extraction and refinement of potash ore is a complex process as many companies are focused on removing it from ancient underground oceans of potassium salts. These are often located hundreds of feet or more below the surface.
Potash ore is extracted in two ways. In conventional underground mining, ore is dug out by large machines and transported to the surface. This method is expensive, but is also the most common. Solution mining is less common, and involves injecting hot brine (a salt water solution) below the surface and into the ore body. The potash-brine solution is then pumped back to the surface for cooling and separation on surface ponds.
There are two predominant varieties of potash ore: sylvinite and carnallite. Sylvinite typically has a higher value than carnallite as it requires less energy to separate the potassium chloride it contains than it does to separate the magnesium in carnallite.
Canada is the world’s top producer of potash, and also holds the largest reserves. Other top producers include Russia, China and Belarus.
Phosphate is critical for all living organisms, and a whopping 90 percent of it is used for crop applications in support of plant growth. Its primary function is to support strong cell development and water retention.
Phosphate rock, or “phos-rock,” is ore that contains phosphorus. It is located at various depths, and extraction typically requires the use of large drag-line buckets, which scoop up the material for refinement. The phos-rock is then beneficiated, or refined, with small phosphate pebbles being left behind.
Those phosphate particles are coated with hydrocarbons during flotation, and then float to the surface for further separation. The resulting product is beneficiated phosphate rock. Its phosphorus pentoxide content is suitable for phosporic acid or elemental phosphorous production.
Beneficiated phosphate rock is often upgraded into granular diammonium or monoammonium phosphate (DAP and MAP, respectively), both of which are high-grade, water-soluble fertilizers that can be applied to crops. Single super phosphate is a cheaper alternative to the popular DAP, and is obtained through a chemical reaction between rock phosphate and sulfuric acid.
The world’s top producer of phosphate rock by a wide margin is China. The US, Morocco and Western Sahara and Russia are also key phosphate rock producers.
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.