Potash miners benefit from strong fertilizer demand
Several of the top potash miners have reported strong third-quarter earnings, as mining profits for these companies reflected a rise in demand for fertilizer around the world, Reuters reported.
Proactive Investors reported that despite the growing economic uncertainty, the demand for fertilizer has remained strong, and several experts within the sector predicted that orders for the resource would reach record levels by the end of 2011.
The push to capitalize on strong crop economics continued to support demand for fertilizer around the world, and potash miners would see a rise in mining profits if the trend continued, according to the news source.
Reuters reported that strong grain prices may have been one of the main reasons that the potash demand could reach record levels, as fertilizer products would be purchased by farmers around the world at increasing rates.
Higher prices for potash resulted from the increased demand, and this also led to a sharp rise in the mining profits for the associated companies.
According to the United States Geological Survey, the economic downturn in 2009 had led to the closure of several key mining sites and had a significant impact on the sector. A historic drop occurred, and this could have been partially responsible for the current state of potash mining companies.
The Potash Corp. was one of the companies who was able to benefit from this previous drop. The mining firm posted a net income in fiscal 2011 that was more than double what was recorded in the previous year, according to Reuters.
Company officials noted that although fertilizer dealers around the world were acting prudently to avoid significant losses in the current economy, demand didn't mirror this conservative approach.
"We believe most producers have been operating at or near their full capabilities in an attempt to keep pace," the company said in a release.
According to Reuters, the company also addressed the volatility of grain prices in the recent months, and noted that despite these fluctuating costs, low global grain inventories would not be a negative influence on potash.
Several smaller potash miners are stepping up their efforts to increase production while the prices favor the resource, as Sirius Minerals and Western Potash both saw their value increase due to the current commodity prices trends, according to Stock Market Wire.