Potash sales anticipated to reach unprecedented high in 2022 Potash sales anticipated to reach unprecedented high in November 16, 2022It’s been a record year for potash in Saskatchewan, and 2022 isn’t even done yet.
The province’s potash sector — the largest segment of Saskatchewan’s mining industry —already had a record-breaking year for revenues from this key mineral used in fertilizer even before the year was three-quarters of the way through.With the invasion of Ukraine, we’ve seen a lot more countries and companies try to find secure, reliable and ethical producers of potash,” says Pam Schwann, president of the Saskatchewan Mining Association (SMA).
“And many have turned their attention to Saskatchewan.”
That helped lead to record revenues for producers by the end of August, increasing more than 186 per cent, year to date, from 2021 to nearly $11.9 billion.
This eclipses the previous record set in 2021 when sales were $7.6 billion.Driving growth are prices per tonne of potash, which have not just recovered from recent lows a few years ago, but have been soaring since the start of the year.
“Since reaching a floor in 2020, potash prices have been increasing and reached their highest level in over a decade during the first half of 2022, driven by market growth, strong crop prices and supply disruptions from sanctions,” says Jim Reiter, Minister of Energy and Resources for the Government of Saskatchewan.
He further notes potash prices have “softened” from their highs, but the price still remains high above historical levels and is expected to stay elevated in 2023In fact, sales have been so strong in Saskatchewan — the world’s largest producer with the world’s largest reserves — they have already exceeded the government’s goal of reaching annual revenues of $9 billion by 2030.
The key driver has been the price of potash — which previous to 2021 had been in a multi-year slump, Schwann says.
“Potash sales for Saskatchewan could reach $15 billion this year, and that’s unprecedented,” she says, pointing to prices per tonne increasing more than 125 per cent this year.
The coming year may not see as significant a rise in price as this year, but prices are likely to stay high, according to the province’s largest producers: Nutrien, K+S Potash Canada and The Mosaic Company. All are ramping up production.
“We hope (high prices will continue), but as we all know, it’s a cyclical market,” Schwann says, noting potash, as a commodity, can be prone to wild price swings.
Yet the current situation for supply presents an opportunity for the province’s potash producers. For one, demand is rising from farmers looking to produce more on less arable land that is increasingly nutrient deficient in the face of climate change.
At the same time, Saskatchewan miners have the opportunity to capture market share that two major producers — Belarus and Russia — have lost, as consumers of the commodity recognize “the importance of a secure, ethical supplier like Saskatchewan,” she says.
So far high prices have driven growth starting even last year when the U.S. sanctioned Belarus, the world’s second largest producer. Then, Russia — the world’s third largest producer — invaded Ukraine in February, effectively losing its access to U.S. and European supply chains.
It’s a seismic shift, given Russia and Belarus account for nearly 40 per cent of global potash production.
“With ongoing sanctions and challenges for potash from these two countries to reach global markets, more buyers are turning to Saskatchewan,” Reiter says.
“All of Saskatchewan’s potash producers have announced production increases … and are evaluating opportunities to invest in increased operating capability levels in the future.”
He further points to BHP Canada’s $5.7-billion Jansen mine, currently under construction, which had been slated to go into production in 2027. BHP now aims to speed up the project to start operations in 2026.
Major existing Saskatchewan miners like Nutrien forecast strong demand going forward, estimating Russian production may fall by 66 per cent while Belarus’s output may decrease about 50 per cent..