A recent report found that phosphate feed demand is growing and is expected to continue growing in the coming years. Not only has this caused a rise in prices but it is also creating a rush of expansion and the opening of new mines as phosphate producers find value in previously untapped sources.
The report, named the Global Feed Phosphate Market Research Report and published by Persistence Market Research (PMR), states that, “The feed phosphate market reached a value of nearly US$ 1.5 billion in 2018…[and] will expand at over 4% CAGR between 2018 and 2028.” The study also found that, “By species, poultry is projected to remain dominant in the global feed phosphate market, with a considerably high market share of more than 43% at present.”
While the reasons for this growth are manifold, the feed industry journal All About Feed, notes that, “The demand for feed phosphates has increased due to … an increase in the demand for high-quality meat products.”
The growth in demand for phosphate feedstocks saw prices rise throughout most of last year. As discussed in an earlier AG CHEMI GROUP article, “In December 2017, the price for 1 metric tonne of phosphate was US$80.22, while in November 2018 that price had grown to US$92.50. Prices were flat from December 2017 to February 2018, but from there rose incrementally every month with only a brief period of decrease mid-year.”
These price increases have been fuelled not only by an increase in demand, but also by a drop in production in China. As Georgia Williams, a rock phosphate and mining specialist at the journal Investing News, notes, “The global phosphate market has been impacted by dwindling supply as a result of China cracking down on pollution and questionable mining practises”
Phosphate samples waiting to be shipped
More significantly, is the belief from phosphate miners and explorers that the demand increase trend will continue. One such phosphate industry head is Chris Castle, CEO and managing director of Chatham a global supplier of rock phosphate, who said in a recent interview that, “Over time the planet’s population will continue to grow […] and you use 10 times more phosphate for high-protein food. If you go from vegetable protein to meat protein the amount goes up, So I expect overall the demand for phosphate to go up.”
This makes for good news for Castle and others hoping to increase their phosphate businesses. As Williams observes, “It is an ideal time for phosphate miners and developers outside the Asian nation [China] to assert their role in the space.”
That is why Chatham is expanding its phosphate mining operations and has applied for a mining permit to extract phosphate from the seabed off of the New Zealand coast at a depth of 400m. As a Chatham press release explains, “Mining the resource has only become viable with the rising price of phosphate and advances in marine technology.” Adding that the company has, “… identified at least 35 million tonnes within the mining permit area – more than a 20-year supply at expected production rates.”
Chatham’s mining licence area 500km east of Christchurch
Currently New Zealand imports more than 1 million tonnes of phosphate a year, mostly from Morocco, making the extraction project not just a profitable operation but also a strategic one.
Furthermore, the phosphate that would be extracted is of a high-quality with a low cadmium content, improving its environmental credentials.
“Phosphate prices are generally moving up, but our particular rock phosphate is in a niche part of the market anyway, and we expect those to move up over time as well,” says Castle. “For our particular rock phosphate, because it’s low cadmium [demand] will move up even more.”
Rock phosphate samples found on the seabed near New Zealand
This demand growth is also pushing advancement of another phosphate project due to get under way in 2019, as Avenira moves ahead with expansion at its Senegal-based Baobab phosphate project.
The decision was made following a positive outcome of the project’s feasibility study. As Louis Calvarin, CEO and managing director of Avenira, made clear in a recent interview on the YouTube channel Proactive Investors, explaining that, “Our current focus is to develop the Baobab phosphate project in Senegal. The resource is really world-scale. It is a very large mineral resource, which has recently been granted a mining lease, the exploitation permit in Senegal, … giving us a multi-decade mine life.”
While in a resource statement, the company announced that, “The Indicated Mineral Resource within the Permit area is estimated at 41.8 million tonnes at 19.4% P2O5 at a cut-off grade of 10% P2O5, and the Inferred Mineral Resource within the Permit area is estimated at 247 million tonnes at 16.0% P2O5 at a cut-off grade of 10% P2O5.”
These two massive projects, once fully on-stream, are certain to impact phosphate markets. But they are just two small steps towards meeting future global demand. With the latest data showing that in 2016, 203 million tonnes of phosphate was consumed, but by 2024, consumption is expected to rise to an unprecedented 268 million tonnes.
While mankind is fortunate to have several hundred years’ worth of phosphate reserves awaiting extraction, it will take continued investment and further mega-projects to maintain sufficient supply.