This is part one of a two-part story on Australia's phosphate sector and the impacts for global fertilizer markets. The second part will focus on challenging logistics and high energy prices faced by current producers.
| Incitec Pivot has integrated its mining and downstream processing operations at the Phosphate Hill project in Queensland, Australia. |
China's restrictions on phosphate exports have opened the door for Australia to become a key supplier for vulnerable fertilizer markets domestically and across the Asia-Pacific region.
Australia ranks among the top 10 countries with the largest reserves and resources of contained phosphate, according to the latest S&P Global Market Intelligence data. The mineral is one of the three most common nutrients used in fertilizers, along with nitrogen and potassium.
Companies at the Australian Potash & Phosphate Conference held in Perth on Nov. 22-23 stressed the need for global food security and its importance to investors and customers as the world's population topped 8 billion that month.
China's move to restrict phosphate exports in September 2021 and extend the restrictions in mid-2022 has exacerbated pressure on global fertilizer supply chains that were already disrupted by the shipping crisis. And the market disruptions look to be working in Australia's favor.
"China has basically capped exports since late 2021 while prioritizing its domestic market," Alberto Persona, S&P Global Commodity Insights' associate director of phosphate and potash, said in an email interview. "Countries in Southeast Asia suddenly saw their main trade partner cut supply lines — these were filled by product from Morocco, Saudi Arabia [and] Russia, but clearly there is space for a player in Asia Pacific, and Australia is well placed.
"Australia can become a larger player in phosphates, especially as mainland China is restricting its exports of phosphate fertilizers, including key traded products like diammonium phosphate, or DAP, and monoammonium phosphate, or MAP."
Just as Australia's sulfate-of-potash hopefuls want their government to recognize their commodity as a critical mineral to attract investment funding, phosphate should be seen as a "critical raw material" because only five countries control 90% of reserves, and China's export restrictions removed 30% of global trade, according to Tunisia-focused phosphate explorer PhosCo Ltd.
High prices easing
The Ukraine conflict and China's export restrictions drove global fertilizer prices sharply higher in the fiscal year ended Sept. 30, with realized ammonium phosphate prices up more than 62% year over year and realized urea prices up by over 90%, Australian producer Incitec Pivot Ltd. said Nov. 28 in its annual report.
Commodity Insights sees prices for DAP and MAP falling from 2023 through 2026, then stabilizing at higher levels than those seen in 2013.
"The energy crisis will at some point pass. Russian product has remained available to the market despite early concerns, and Chinese export restrictions will ease somewhat but remain in place," Persona said. "Hence our forecast for a sharp decline in phosphate prices, yet to a higher level compared to recent years."
Commercial opportunities
Persona expects Australia's real commercial opportunities to lie in DAP and MAP, rather than phosphate rock, which means going further downstream and therefore requiring more capital expenditure. While "there are challenges, most can be overcome," he said.
Australia's phosphate production currently comes from Centrex Ltd.'s Ardmore project in Queensland, which produced its first beneficiated ore in June, and Incitec Pivot's nearby Phosphate Hill integrated mine and fertilizer operation.
Incitec Pivot has been producing ammonium phosphate fertilizer at Phosphate Hill since 1999. The facility has the capacity to produce over 1 million tonnes annually from phosphate rock mined on site, ammonia produced on site and sulfuric acid manufactured at its Mt Isa facility.
Georgina Basin opportunity
Asian and Australian markets are the targets of phosphate projects in the vast Georgina Basin geological province, which spans the Northern Territory and Queensland, and where "we've only really scratched the phosphate potential," Verdant Minerals Ltd. Managing Director Chris Tziolis told Commodity Insights.
"Most phosphate concentrate production comes out of Morocco, and fertilizers out of northern Africa, the Middle East, Russia and China, so you don't need to think too hard about geopolitical scenarios that could make that problematic" and work in Australia's favor, Tziolis said.
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| Phosphate rock from Verdant Minerals' Ammaroo ammonium phosphate fertilizer project in the Northern Territory, Australia. |
Verdant needs a development partner as it seeks an investment decision by early 2024 to advance one of the world's largest undeveloped phosphate deposits, the Ammaroo project in the Northern Territory. The company plans to produce 2 Mt/y of phosphate concentrate, with further downstream processing to get 500,000 t/y of merchant grade phosphoric acid and 200,000 t/y of ammonia for conversion to about 1 Mt/y of ammonium phosphate fertilizers like DAP and MAP.
The huge resource provides the option of just starting with exporting phosphate rock concentrate, producing and exporting phosphoric acid, or making fertilizers, Tziolis said.
For its Paradise South project in Queensland, North West Phosphate is targeting the 3 Mt/y of demand seen in Indonesia, Australia and New Zealand, which are currently largely supplied by Togo, Morocco and Jordan, Managing Director John Cotter told Commodity Insights. The company, which claims to have Australia's largest phosphate resource holding, has also had strong interest from parties in India.
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