The fertilizer story is picking up speed in the Middle East. Food supply - and prices - will be an ongoing issue there as government strive to avert the repeat of uprisings. And, while we concentrate on producers of potash, we must also begin to look at the potential customers. And, again, while there has been considerable news flow about the negotiations with and sales to China and India, there are many other markets that will figure largely in the ongoing fertilizer and potash story.
Take Egypt with 83 million people to feed and 32 per cent of the labor force engaged in agriculture. No potash is produced in the country, although there have been reports of deposits being found, according to the Food and Agricultural Organization (FAO). As the UN agency explains, Egypt has a long tradition of using mineral fertilizers, its first use of Chilean nitrates dating back to 1902. For over thirty years, all mineral fertilizers were imported, until the local production of phosphate fertilizers started in 1936. The production of nitrogen fertilizers began in 1951.
Last week the International Finance Corp, an arm of the World Bank, approved a loan and equity package totalling $250 million for the Egyptian Fertilizer Company, and the IFC will be helping the company raise a further $200 million from other lenders. Egyptian Fertilizer aims to increase production significantly by 2012 which will make the group one of the world’s top three producers. The parent company operates fertilizer plants in Algeria and the Netherlands as well as in Egypt itself. All the output is nitrogen-based fertilizer but the interesting question is: what is the potential for potash in Egypt? The latest FAO statistics are for 2002 and which showed farmers in the most populous North African nation applied 1.2 million tonnes of nitrogen-based fertilizers, 200,000 tonnes of phosphate-based - and around just 20,000 tonnes of fertilizer using potash.