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Enter the miners

Summary

BHP Billiton, Vale and Rio Tinto are among the world's largest mining companies, with highly diversified mineral resource portfolios. Only recently did they become involved with fertilizer raw materials, and all seemed to like what they saw. We assess the potential long-term impact of these companies' involvement.

Abstract

The first half of 2008 was an intoxicating period for every commodity market. With the benefit of post-Credit Crunch hindsight, we can now see this time to have been one of “silly money”, a febrile period when there appeared to be too much money chasing business and investment opportunity, irrespective of risk. Skyrocketing prices for fertilizers and associated raw materials attracted new entrants into the sector, including junior mining companies that were specifically launched to exploit phosphate and potash resources in North America, Latin America, Africa and Australia. The giant mining companies, such as BHP Billiton and Rio Tinto, had a colossal presence in other mining sectors but hitherto had minimal involvement with fertilizer raw materials. However, both companies have become much more closely involved through the promotion of major potash projects, while the Brazilian mining major, Vale – which already operated the Taquari-Vassouras potash mine in Brazil – became more closely involved in the phosphate sector, taking over the Bayóvar phosphate rock mine project in Brazil.

The collapse in commodity prices in the final quarters of 2008 and the turbulence experienced post-Lehman Brothers bankruptcy in world capital markets promoted speculation that the mining giants would review their growing commitment to the fertilizer sector and perhaps sell off their investments there to concentrate on other core businesses. This is exactly what Rio Tinto chose to do, but expectations were otherwise confounded as BHP Billiton and Vale actually stepped up their involvement in bringing new potash and phosphate projects on stream. Indeed, in the space of just two years, Vale has emerged as a highly dynamic force in the international fertilizer industry. Here, we assess how the mining giants entered the fertilizer sector and what their strategic goals are for the long-term development of their new industry investments.

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Madhya Pradesh carries the Indian phosphate rock torch

Summary

India has a major requirement for P2O5 fertilizers, but the country's indigenous phosphate industry can draw on only limited supplies of rock that is of low- or medium-grade quality. Several projects however have been mooted to raise India's output of phosphate rock, as reported here.

Abstract

While India has an indigenous phosphate fertilizer industry, producing mainly single superphosphate (SSP) and is the world’s fourth largest consumer of phosphate fertilizers, the country is endowed with only limited reserves of phosphate rock. Total Indian phosphate reserves are estimated to stand at around 210 million tonnes of rock, with the principal deposits located in Rajasthan (around 74 million tonnes), Uttar Pradesh and Madhya Pradesh states. These deposits are primarily sedimentary, offering only limited reserves of higher grade material. Five phosphate rock mines are currently operational, offering an aggregate capacity of 2.06 million t/a. India is between 25-33% self-sufficient in its phosphate rock production. In 2008, the US Geological Survey (USGS) estimated that India’s production totalled 1.22 million tonnes, some 0.8% out of a world total of 161 million tonnes. The operational phosphate rock mines are listed in Table 1.

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A fast rising profile

Summary

The former Soviet Republic of Kazakhstan has an abundant supply of mineral and fossil fuel resources, and since 1991 the development of petroleum, natural gas, sulphur and phosphate products has attracted over $40 billion of foreign investment. We examine the outlook for the phosphate and other fertilizer industries in this fast-growing country.

Abstract

Since gaining independence in 1991, the landlocked former Soviet Republic of Kazakhstan has made significant progress in building up its economy and infrastructure. Kazakhstan’s economy is the largest in Central Asia, with an estimated GDP of $178 billion in 2009. The country possesses enormous reserves of fossil fuels as well as minerals and metals, while its vast steppe lands offer considerable agricultural potential.

Oil and gas is the leading economic sector. Kazakhstan has the potential to join the ranks of world-class oil exporters in the medium term, and the country holds 3.3% of the world’s crude oil reserves and 1.7% of natural gas reserves. The Kazakh government has declared its goal of raising oil output to 3,000 kbpd by 2015, or 150 million t/a – equivalent to a 200% rise in production from current levels. The development of the massive Kashagan oil field – the fifth largest in the world – will bring an additional 1,000-1,500 kbpd on stream when the first production begins in 2013.

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Cooling the solids in N and P plants

Summary

A look at the various technologies available, including rotary drum, fluid bed and bulk solids coolers.

Abstract

A look at the various technologies available, including rotary drum, fluid bed and bulk solids coolers.

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The transformation of Sinochem

Summary

David Hayes recently visited the Sinochem Fertilizers offices in Beijing. He learnt how since becoming a listed company in 2005, Sinochem has expanded from being an importer of fertilizers to one of China's leading producers.

Abstract

The Chinese Academy of Agricultural Science (CAAS) reported that the country’s consumption of fertilizers totalled nearly 52 million tonnes in 2008, an increase of 26% on the 2000 total of 41 million tonnes. 2009 was expected to show a further rise in China’s fertilizer consumption. Nitrogen fertilizers predominate, with consumption reaching 23.3 million tonnes in 2008, up by about 1.5% from almost 23 million tonnes in the previous year. Urea is the most widely used nitrogen fertilizer, although total urea use has remained relatively stable during the past decade: the main trend has been for rising domestic production to replace imports. China has also switched to using coal as a low-cost methanol/urea feedstock to allow more natural gas to be used for energy purposes.

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Sandvik for steel and special alloys

Summary

Founded in Sweden in 1862, Sandvik enjoys worldwide renown as a high-tech engineering group and as a global leader in material technology, processing systems and manufacturing and construction. Sandvik offers many facets in the fertilizer and associated raw materials sectors. Here were, we spotlight its commitment to providing steels and alloys that meet the demands of the urea and phosphoric acid industries.

Abstract

Today’s high-technology engineering group can trace its roots to the Swedish town of Sandviken, where Göran Fredrik Göransson founded the company in 1862. As a world leader in tooling, materials technology, mining and construction, Sandvik AB has around 44,000 employees in 130 countries, reporting sales in 2009 of SEK 72 billion ($10.0 billion). The group consists of three business areas:

  • Sandvik Materials Technology
  • Sandvik Tooling
  • Sandvik Mining and Construction.

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Working together with CFIh

Summary

A look at a rapidly expanding supplier of fertilizer, crystallisation and evaporation technology.

Abstract

CFIh (CFI holding Pte. Ltd.) is gaining a high profile as a provider of engineering services to the fertilizer, explosives and chemicals industries, with a particular expertise in crystallisation and evaporation processes. The CFIh group comprises four business units, namely:

  • CFIe (Chemical & Fertilizer Industry Engineering, France
  • CFIt (CFI Technologies Pvt. Ltd.), India
  • CFIa (CFI Africa S.A.R.L.), Tunisia
  • CFIb (CFI Brazil Projetos Industriais Ltda.), Brazil.

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A tool for better plants and better operations

Summary

We examine how modelling technology can help in the design of new fertilizer plants and debottleneck existing ones to achieve high rates of product purity, increased energy recovery and automatic process analysis to optimise plant operations.

Abstract

In common with other process industries, the fertilizer industry has embraced modelling and process simulations in order to exert tighter control over the production processes in a broad range of operational permutations. As fertilizer markets have become ever more competitive, fertilizer industry managers recognise that process operation has to allow fully predictable parameters that enable them to process different raw materials and produce a range of products, in ways that minimise costs, maximise production rates, minimise inventories and enable companies to benefit from fluctuating market prices.

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Financial performance: a slow return of confidence

Summary

Who have been the biggest winners in the past year, streaking ahead of the rest in terms of profits, margins and returns on capital?

Abstract

After the financial buffeting it endured in the months that followed the global financial meltdown of late 2008, the international fertilizer industry was for the most part able to meet the challenges of a tough 2009 to end the year in distinctly more robust shape. This was helped by the stabilisation of demand and a return in the final quarters of the year of a supply-driven pattern of profitability. Most producers moved back to profit by the fourth quarter of 2009, but as noted by Integer Research, higher-cost producers or those lower-margin businesses with significant reselling and mixing operations reported mixed results. (Fertilizer Financial Bulletin, Integer Research, March 2010)

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Brazil is ready to wield a global influence

Summary

With GDP growth rates that are currently matched only by China, Brazil is ready to wield a global influence. This is an economic take-off in which Brazil's agricultural sector has played a leading role, and an indigenous fertilizer industry has been developed in parallel. However, this industry has only played a partial role in meeting the needs of the country's farmers, thus imported fertilizers have continued to predominate to the chagrin of the present political leadership. Meanwhile, the first months of 2010 have seen the radical restructuring of the Brazilian fertilizer industry, under the stewardship of Vale. We assess Brazil's prospects of wielding a greater influence in offshore markets.

Abstract

Brazil’s economic miracle continues unabated, and the GDP growth rate touched 9% in the first quarter of 2010. It has been spurred by the energy and agricultural sectors: oil revenues now account for 12% of Brazil’s GDP and may rise to as high as 20% as Brazil rushes to exploit the vast reserves of oil off its shoreline close to Rio de Janeiro.

Brazil’s economic take-off has been underpinned as per the classic model by an agrarian revolution, providing Brazil with strength and potential in food and feed, as well as fuel. Brazil’s agricultural economy is based on 367 million ha of land for potential agricultural use, of which 80 million ha have yet to be brought into use. Of the total land currently being cultivated, pasture accounts for 215 million ha, annual crops 47 million ha and permanent crops 15 million ha.

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