http://www.theaustralian.com.au/business/mining-energy/phosphate-...

http://www.theaustralian.com.au/business/mining-energy/phosphate-back-on-boil/story-e6frg9ex-1225850484997

Phosphate back on boil
Robin Bromby From: The Australian April 06, 2010 1:42PM

SINCE last November prices for phosphate - or, more accurately, fertiliser diammonium phosphate (DAP) - have risen 63 per cent, from $US300 a tonne to $US490/tonne.

Over the past year, while potash and phosphate prices languished, Pure Speculation has stood by its guns on the bullish long-term outlook for the fertiliser feed-stocks. A rising world population, a growing middle class in Asia with the money to move beyond rice as an everyday stable, and the diminishing amount of farmland all point to a looming world food crisis. Weve taken a bit of stick from some readers on this stand, but never flinched.

Overnight weve had third quarter earnings from the US-based fertiliser giant Mosaic Co, its three-month earnings almost quadrupling over the same period last year. Mosaic reported the increase in profits was driven mainly by improved demand for both phosphate and potash.



Phosphate was back in the news today with the announcement from GBM Resources that it has pulled the plug on a proposed joint venture with Singapore-based Resource Kings. GBZ is concentrating on its Brightlands gold-copper project, and needs someone else to finance the phosphate play near Mount Isa.

It seems that the Singaporeans had trouble getting their financial act together, and we understand that GBZ decided to cancel the deal rather than be strung along for another few months and still end up with a stalemate. The junior is now aiming to have a new joint venture partner on board before the end of 2010.

Certainly, the climate for investing in the fertiliser story is growing stronger.

Its a sign that you can sell the fertiliser story once again that Perth-based Strata Minerals which will trade under code STJ when listed - has launched a $3 million initial public offering, and left open the ability to accept a further $2m.

There are several projects in the Strata portfolio, the initial focus being Mornington, located 150km northeast of Fitzroy Crossing in Western Australia.

Strata has taken an unusual tack in recruiting shareholders it has mailed about 27,000 farmers around Australia. The company believes farmers will understand the long-term fertiliser/food shortages story, and make loyal shareholders.

Managing director Nigel Gellard believes phosphate is going to become one of the worlds strategic commodities.

And he is not troubled by the planned big expansion of phosphate production in Saudi Arabia, arguing that the recent price rises have taken place at a time when the Saudi move was known to the market.

The Saudi Arabian Mining Co (Maaden) is now undertaking feasibility studies for an expansion of production at the Al-Khabra deposit near Turaif, in northern Saudi Arabia.

Meanwhile, the Saudi Gazette said that a railway to transport phosphate ore that would serve a project Saudi Arabian Mining Co is developing is expected to be in operation by the end of this year. So far 800km of the total 1486km line has been completed.

Maaden, together with Saudi Basic Industries Corp, is doubling capacity at its Saudi fertilizer plant to 6 million tonnes per year. The project will use phosphate from a deposit at Al Jalamid and local gas and sulfur supplies to manufacture the fertiliser DAP.