The world’s population continues to grow, and so too does demand for agricultural crops. Not surprisingly, it’s becoming increasingly important for farmers to grow more crops more efficiently.
That’s where potash fertilizers come in — they not only increase food quality, but also boost crop yield. Farmers use various fertilizers to grow crops, but the two most common are sulfate of potash (SOP) and muriate of potash (MOP).
Canada is the world’s top potash country by far, with annual output topping 16 million metric tons (MT) in 2022. China took the second spot in terms of total potash production at 6 million MT, followed by Russia in third place at 5 million MT.
Investors interested in the global potash fertilizer market should know the difference between SOP and MOP. Read on for a look at their common uses, as well as production methods and which companies are are mining these materials.
Potash fertilizers: What is muriate of potash?
MOP, or potassium chloride, is the most commonly employed potash fertilizer and can be used to farm a variety of foods, particularly chloride-loving vegetables such as sugar beets, corn, celery and Swiss chard. It can be beneficial for soil that is low in chloride, helping to build resistance to disease in plants.
There are some drawbacks to this kind of potash fertilizer. For example, if high levels of chloride are present in the soil or if irrigation water is being used to grow crops, adding MOP can create a toxic imbalance in plant nutrients. That means levels of the fertilizer have to be carefully managed, and MOP must only be used for select crops.
Still, MOP remains one of the most commercial fertilizers in the potash family, with over 34.6 million MT consumed in 2021 compared to just 1.8 million MT of SOP. The outlook for the potash fertilizer market as a whole remains positive, although in 2023 MOP prices fell from the highs they experienced in March 2022 — those levels ultimately became cost-prohibitive for farmers. While prices are expected to remain soft in 2024, demand for potassium chloride is set to grow at a compound annual growth rate of 4.13 percent between 2023 and 2030.
Nutrien (TSX:NTR,NYSE:NTR), a company formed by the merger of Potash Corporation of Saskatchewan and Agrium, is a major producer of MOP. However, due to anticipated future demand for fertilizers that promote crop production and plant growth, many smaller companies have begun exploring and developing their own potash projects.
For example, Highfield Resources (ASX:HFR) is an MOP explorer working to bring its Spain-based Muga potash project into production. Muga is expected to produce more than 1 million MT of MOP per year, with EBITDA coming to around 410 million euros annually once it reaches full production. Muga is anticipated to enter construction in early 2024.
Saskatchewan-based Western Potash, a subsidiary of Western Resources (TSX:WRX), began hot mining in mid-2020 as part of Phase 1 mine construction at its Milestone MOP project. Commissioning of the processing plant commenced in May 2023, with plant production slated to commence in December.
Gensource Potash (TSXV:GSP), which is also based in Saskatchewan and focused on MOP, announced in early 2020 that agriculture chemical company HELM would be the offtaker for the company’s Tugaske project in the province. The project is construction ready and financing is underway. Companies such as Verde AgriTech (TSX:NPK,OTCQB:AMHPF), Sage Potash (TSXV:SAGE,OTCQB:SGPTF) and Karnalyte Resources (TSX:KRN) are all also involved in the exploration, development and production of MOP fertilizers.
Potash fertilizers: What is sulfate of potash?
SOP is considered a premium-quality potash. It contains two key nutrients for growing crops: potassium and sulfur. Using SOP improves both quality and crop yields and makes plants more resilient to drought, frost, insects and even disease. SOP can improve the look and taste of foods and boost a plant’s ability to absorb key nutrients like phosphorus and iron.
Most often, SOP is used on high-value crops like fruits, vegetables, nuts, tea, coffee and tobacco. It works better on crops that are sensitive to chloride, which can be toxic to some fruit and vegetable plants.
SOP is not a naturally occurring mineral, and usually must be produced through chemical methods. Because of the resource-intensive processes used to create it, SOP is priced higher than MOP. The most common method used to produce the fertilizer SOP is called the Mannheim process. It involves pouring potassium and other raw minerals into a muffle furnace that is heated above 600 degrees Celsius, creating a reaction between potassium chloride and sulfuric acid. Fertilizer produced like this accounts for roughly 50 to 60 percent of global SOP supply.
The second most common way of making SOP, accounting for about 25 to 30 percent of supply, is by reacting potassium chloride with various sulfate salts to form what is called a double salt.
“The most common raw material employed for this purpose is sodium sulfate. Sodium sulfate, either in the form of mirabilite (also known as Glauber’s Salt) or sulfate brine, is treated with brine saturated with MOP to produce glaserite,” Kalium Lakes (ASX:KLL,OTC Pink:KLLKF), a Western Australia-focused SOP company, explains on its website. “The glaserite is separated and treated with fresh MOP brine, decomposing into potassium sulfate and sodium chloride.”
There are also operations that produce this type of potash fertilizer by using salt mixtures from natural brines. This requires brine with high sulfate levels that are typically found in salt lakes. Companies able to use naturally occurring brines include Compass Minerals International (NYSE:CMP), which operates out of Overland Park in Kansas, and Chile’s SQM (NYSE:SQM), which has operations in the Salar de Atacama. SQM is a major producer of lithium as well.
There are also smaller potash fertilizer companies that eventually plan to produce SOP, including Agrimin (ASX:AMN) which says its Mackay project in Western Australia will be shovel ready in 2024.
Final thoughts on SOP and MOP
Understanding the difference between SOP and MOP is key for investors who want to put money into the fertilizer sector. Potential market participants should also consider the industry’s overall health and outlook, and when it comes to stocks they would do well to consider common factors like jurisdiction, management and finances.
FAQs for potash
What is potash?
Potash is a potassium-rich salt that is formed in underground deposits from evaporated seabeds, where it is then mined. Potassium is considered an essential element for all plants, animals and humans.
The word ‘potash’ is derived from an early production technique where potassium was leached from wood ash and concentrated through evaporation using large iron pots.
What is potash used for?
The vast majority of potash is used in fertilizers to aid in plant growth. A small percentage is used in the manufacturing and production of detergents, ceramics, pharmaceuticals and water conditioners, and as an alternative to de-icing salt.
What is potash fertilizer?
The two most in-demand types of potash fertilizer are MOP (potassium chloride) and SOP.
MOP is more commonly deployed to increase soil health and aid in disease resistance for plants. Crops that use MOP include sugar beets, corn, celery and Swiss chard.
SOP is considered a premium-quality fertilizer as it includes the addition of sulfur. This specialty fertilizer is used on high-value crops such as fruits, vegetables, nuts, tea, coffee and tobacco. SOP improves both quality and crop yields, making plants more resilient to drought, frost, insects and disease.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
