robin bromby

Crop nutrient demand fertile ground for miners.

Robin Bromby From: The Australian December 07, 2009

NORTH America's two largest miners of fertiliser feedstocks say they're seeing a recovery in demand for crop nutrients.
Farmers around the world, and especially in the US, have been holding back on fertilisers because of the global financial crisis and the unavailability of bank loans to buy the stuff. We continue to see the results: in the past few days Israel Chemicals, which operates a large mine at Sodom in its homeland, has confirmed rumours it has been considering closing its two potash mines in Spain until demand picks up.

But Mosaic Co and Potash Corp of Saskatchewan have issued bullish outlooks. This was followed by the chief economist at Canada's Scotiabank -- which has a large commodities arm -- saying potash prices would start getting stronger as demand picks up about mid-2010.

A few weeks ago, Pure Speculation drew attention to the fact that, one, both potash and phosphate were near the bottom of their price cycles and, two, that farmers are going to have to start fertilising big time if crop yields are not to crash.

It seems some of you have been taking this on board to judge by the good bounce in share price at Transit Holdings (TRH) on Thursday with the announcement that it has secured control of a potash deposit in Utah.

The company had being keeping relatively schtum about this deposit, which they hope may hold as much as 3.8 billion tonnes of potash, for fear that a cheque-book waving BHP Billiton (BHP) or Brazil's Vale might pluck it from under Transit's nose. The junior believes it can get enough data from six drill holes, costing about $500,000 each, to prove up at least one billion tonnes.

The hope is that TRH's timing will be such that prices will have recovered by the time the mining green light is flashed. And, of course, the proposed mine is bang in the middle of the world's biggest potash market. Potash has fallen from $US800/tonne to around $US435, but a support level may now be in place.

Another piece of evidence that investor sentiment is turning on the fertiliser story was the 56 per cent bounce on Thursday for Mantle Mining Corp (MNM) when it announced it had intersected high grade phosphate rock at its Barkly project in the Northern Territory. All we can do is repeat our advice of a few weeks back: scour the market for potash and phosphate stocks that have an interesting if so far unappreciated story. This has been a very unloved sector of late. More next week.