COMMENTARY — Thailand’s potash potential

A 75% improvement in North American grain yields between 1965 and 1990 reflected a tripling of fertilizer application rates, as high-yielding crop varieties generally require more fertilizer.

A long period of strong growth of potash consumption in the developed world declined during the 1980s, as markets matured. The slower growth rates were abetted by changing agricultural practices and environmental issues. The situation has been only partly offset by increased demand from developing countries.

The transition to market economics has caused fertilizer usage to fall sharply in the Commonwealth of Independent States (CIS) and Eastern Europe, where potash consumption fell by some 1 million tonnes in 1991. The net result has been a decline in demand to fewer than 23 million tonnes in 1991-92 from 28 million tonnes in 1989. It is assumed that consumption by China and the developing countries of Southeast Asia and Latin America will restore an overall growth of 2% per year, for the remainder of the decade. Asian markets consume nearly 7 million tonnes potash annually, of which the bulk is imported from Canada and eastern Germany. The potential growth in total demand from Asian markets is projected to raise import requirements to almost 12 million tonnes per year by the year 2000.

As with many commodities, potential Chinese demand for potash is a crucial factor. With nearly a quarter of the world’s population, China is a major customer for fertilizers, as it has virtually no domestic supplies. Imports have been erratic, with record levels in 1987-88 followed by a decline and an uplift in 1990-91. The deputy director of the Chinese Institute of Soil Science has estimated that the country will require 6.5 million tonnes of potash by the year 2000.

For all practical purposes, Southeast Asia, and particularly China, produces no potash. As a result, it has to be imported, mainly from Canada and Russia . . . A central potash deposit in Thailand would have a huge, built-in price advantage.

As for Russian supplies, they are in northwest Siberia, which is extremely distant and becoming less economic as the Russian railway system disintegrates under the realities of free-market pricing.

— From a research publication undertaken by David Williamson Associates of London, England, for a client with an interest in a Thai potash project.