Guys - I've taken this article from another thread, but thought...

Guys - I've taken this article from another thread, but thought it relevant to the article posted by Yellowcake or whatever they call themselves.... cheers guys

****

Posted on June 16, 2011 by Alan Bullion
Global potash and phosphate demand is set to boom over the next decade, increasingly displacing sales of nitrogen.
This explains why consolidation fever has hit leading producers over the past year.

New figures from Fertilizers Europe show that some 2.7 million tonnes of potash were used over each of the last three seasons in the EU. This compares with 10.4mt of nitrogen and 2.4mt of phosphate.

Collectively, all three fertilisers were applied to some 135.1m hectares of farmland each season, while 47.9m ha remained unfertilised, including 36.8m ha of grasslands.
The Brussels-based industry body expects significant growth by 2020, with 3.2mt of potash applied each season, compared with 10.8mt of nitrogen and 2.7mt of phosphate. However, the total area of EU fertilised land is seen slightly smaller at 134.6m ha by then.

Nitrogen consumption increases are seen slowing to 4% on average over the next decade, compared with 4.1% in 2010.
In contrast, EU phosphate usage is seen rising by 14.1%, more than triple the 3.9% increase recorded last year, while potash demand is forecast to reach a record value of 18.6% by 2020, more than double the 7.7% rise in 2010.
Significant declines in nitrogen usage are forecast for Denmark, Germany, France and Greece, with a slightly recovery in Sweden and Austria. The main areas of nitrogen growth are in the Eastern European countries of Bulgaria, Romania and Hungary, where fertiliser use is increasing markedly as agricultural production modernises.
For phosphates and potash, significant growth in the next decade is projected mainly for Austria, Belgium, Luxembourg, and the United Kingdom.

China
Globally, two new Wall Street reports could also give fertiliser producers a boost for the remainder of the year.
Both Citigroup and Barron�s have raised price targets on the sector citing strong short term and long term fundamentals.
Citigroup upgraded both top producers Mosaic and Potash Corp. of Saskatchewan to buy, citing strong long term global agricultural needs as well as reduced Chinese fertiliser exports. Barron�s upgrade cited depleted inventories and consolidation among Russian producers as bullish catalysts for the sector.
Along with growing global population, fertiliser prices are seeing new highs. The average US farm price of fertilisers has soared over the past 12 months and has exceeded record highs set in 2008. USDA data shows that fertiliser prices have overtaken rising farmer incomes over the past two decades.
In the UK, fertiliser prices are rising strongly and set to remain high at least until early 2012, Ken Bowler, marketing manager of fertiliser manufacturer GrowHow has said.
Prices for Egyptian granular urea have risen to US$530 a tonne FOB in June from $330 in April and just $230 at the same time last year, reflecting market fundamentals. �That has really surprised the market across Europe,� he said.
Meanwhile, potash prices are expected to reach US$600 a tonne by 2012, from a spot price of between $510-540 now, according to analysts at CIS investment bank Troika Dialog.
One particular reason is that several countries have either lost export capacity or have reduced self-sufficiency in fertiliser production. �For instance, a reduction in gas supplies means Pakistan entered the world market seeking an extra 300,000 tonnes of urea. Similarly, Bangladesh has diverted scarce gas supplies to energy rather than ammonia production.�
Bowler also cited lower Chinese exports as a key factor. �There had been expectations that China would once again become a major exporter. However, the latest view is that China will be exporting less during July to November which will put strong upward pressure on prices,� he said.
Bowler said prices would eventually fall back but probably not until late in the first quarter of 2012 or into the second quarter of next year. �All the forecasters are suggesting it is going to be quite a firm market through to the end of the year and into Q1 (2011) and we will wait and see what happens then,� he predicted.

Russia
But the main interest at the moment is between a potential tie-up between Russian potash miner Uralkali and its Belarussian trading partner Belaruskali, which would create the world�s biggest producer of the fertiliser ingredient with a 21.1mt combined capacity.
Uralkali is also expected to shortly complete a merger with its Russian rival Silvinit and if the Belaruskali deal is successful, the three companies would have an output twice that of the current market leader, Canada�s Potash Corp, with its 12mt capacity.
Belarus President Alexander Lukashenko has previously been reluctant to hand over control of what is widely considered to be the country�s most valuable asset, but a national currency crisis and subsequent bail-out by a Russia-led fund seems to have changed his mind.
In turn, Uralkali�s tycoon owner Suleiman Kerimov is a close ally of Russian Prime Minister Vladimir Putin.
�Adding Belaruskali (to Uralkali) will move the industry further towards a global oligopoly � a market controlled by just two or three big players � and there is no regulation against that,� said Jack Arnoff, director of fund manager Elbrus Capital Partners and a Uralkali shareholder.
China, which currently takes up to 20-30% of Uralkali-Belaruskali�s exports, was also reported to be interested in taking a stake in Belaruskali to exercise some control over prices, Interfax news agency reported last month, but the talks failed.
However, Australia-based mining giant BHP Billiton tried to gatecrash the tightly controlled sector against Chinese competition, with a huge bid for Potash Corp last year, but the deal collapsed amid pressure from Canadian authorities.
It remains to be seen whether the Uralkali deal will succeed where BHP failed, but it does in contrast have powerful regional political oligarchs weighing in its favour.