The Mosaic Company: Market overview
Equity research: The Mosaic Company (Part 2 of 5)
The Mosaic Company (MOS) market overview: Phosphate
The following is a snapshot of global finished phosphate capacity by company:
The phosphate market is a global market, with developing countries (specifically China and India) becoming a much larger part of the demand pie. Most market experts expect long-term phosphate demand to trend at a 2.5% to 3.0% global growth rate.
MOS management outlines a number phosphate market facts, some specific to MOS and others relating to the phosphate market as a whole. The following are, at a high level, the main talking points when it comes to MOS and the phosphate industry:
Sedimentary and igneous formations
Large economically viable reserves: North Africa, Western China, Central Florida, and Russia
Largest producer of concentrated phosphate crop nutrients accounting for 12% of global output
Over 35 years of rock reserves
Low-cost manufacturer
Premium products
Global distribution facilities
JV (joint venture) in Peru and announced Saudi Arabia JV
Potash
The following is a snapshot of global potash production by company:
The potash market is as well a global market, with developing countries becoming a much larger part of the demand pie. However, because potash implementation on agriculture land can be “skipped” every now and again, it can be a discretionary nutrient for farmers during cost-conscious times (such as 2009). Most market experts expect long-term potash demand to trend at a 2.5% to 3.5% global growth rate.
MOS management’s potash market facts are as follows:
Obtained through underground or solution mining
80% of reserved in Canada and Russia
Over a century of reserves
10.7 million tonnes of operational capacity
One of the largest potash producers in the world
Potash expansion plants:
$3 billion in capital, 3 million tonnes
On time, on scope, on budget
Delaying future 2 million tonne projects
The Market Realist Take
Mosaic announced on October 2 that the North American phosphate export association PhosChem has been disbanded. The association handled the US exports of phosphate for Potash Corp of Saskatchewan (POT) and Mosaic (MOS). MOS had represented over 90% of the PhosChem volumes and noted that PhosChem didn’t own any hard assets like Canpotex, so the decision to disband made sense.
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