• Fertilizer prices up 30% since the start of the year due to the Russia/Ukraine war
  • Europe’s nitrogen capacity heavily exposed to rising gas prices
  • Ukraine Committee on Agrarian and Land Policy says a global food crisis is looming


Fertiliser is the latest commodity experiencing a parabolic price increase. CRU Group’s fertiliser price index has hit a new record high of $377 per metric tonne.

That’s a 30% gain since the start of the year and higher than previous record in 2008 – and the commodities analysts say the peak has yet to be seen.

It all comes down to the Russia/Ukraine war.

“Fertiliser prices have reached a record high on the back of the war in Ukraine and its repercussions on trade flows,” CRU head of fertilisers Chris Lawson said.

“Russia is a key exporter of nitrogen, phosphate and potash fertilisers.

“Trade with Russia has not stopped but slowed significantly as importers and vessel charterers steer clear of the country.”


Urea impacted by Europe’s gas crisis

Plus, gas is a key input for fertiliser production – especially urea which is the most commonly used nitrogen fertiliser.

This means that Europe’s nitrogen capacity is heavily exposed to rising natural gas prices.

“High gas prices have resulted in a curtailing of production in regions such as Europe, further constricting an already tight market,” Lawson said.

Plus, he says that sanctions in Belarus have huge implications for the potash market. Combined with Russia they contribute around 40% of traded volumes annually.

In Australia and Southeast Asia region, the demand for urea annually is approximately 2Mt and 24Mt respectively.

And we import nearly all our urea, with a good 70% of it from the Middle East and China. But tensions around supply have been mounting after China announced an export ban in August last year and then Russia also restricted nitrogen and phosphate fertiliser exports for a period of six months from December 1 – and then it went to war.


Prices were already increasing before the conflict

Lawson said that since the beginning of 2020, nitrogen fertiliser prices have increased fourfold, while phosphate and potash prices over threefold.

“While farmers in developed markets have benefitted from high agricultural commodity prices, helping to partly offset high input prices, demand destruction is increasingly likely due to high prices and supply shortfalls,” he said.

“Fertiliser/plant nutrition is one of many variables in farming systems and a prolonged period of fertilizer underapplication will impact longer term yields.

“Given the already tight grains and oilseeds market, and the importance of both Russia and Ukraine in those markets, food price inflation is an increasingly prominent risk.”

Even in Brazil, there are reports that farmers who were waiting for fertiliser prices to decrease have been caught short.



The world relies on Ukraine for vegetable oils and grain

Not only are we lacking in the fertiliser to grow crops, but last week the Ukraine Committee on Agrarian and Land Policy said a global food crisis is looming.

Ukraine is the leading exporter of sunflower oil and meal in the world. It exported around 5.4 million of the total 10.9 million tonnes exported in the FY21 financial year.

And according to the European Association of Producers and Processors of Vegetable Oils and Fats (FEDIOL), European processing plants receive 35-45% of oil from Ukraine.

“Available stocks in the EU are estimated to last between four to six weeks,” FEDIOL said.

“Beyond that period, it is likely that lack of availability of crude sunflower seed oil and limited alternatives will lead to a shortfall of refined/bottled sunflower seed oil on the European market, and that this will be felt up to the consumer level.”

Plus, the country is in the top five exporters of grains and legumes.

To put that in context, around 400 million people globally depend on grain supplies from Ukraine.


Our breadbasket is being bombed

Last week UN Secretary-General Antonio Guterres said the world is heading for a “global hunger meltdown,” with developing countries already struggle to recover from the pandemic, record inflation, rising interest rates and looming debt burdens.

“Now their breadbasket is being bombed,” he said.

“Food, fuel and fertiliser prices are skyrocketing. Supply chains are being disrupted. And the costs and delays of transportation of imported goods – when available – are at record levels.

“All of this is hitting the poorest the hardest and planting the seeds for political instability and unrest around the globe.”

He flagged that 45 African and least developed countries import at least a third of their wheat from Ukraine or Russia, with 18 of those importing at least 50 per cent.

“We must do everything possible to avert a hurricane of hunger and a meltdown of the global food system,” Guterres said.

In response, the UN has now established a Global Crisis Response Group on Food, Energy and Finance, based at the Secretariat in New York, to be overseen by Deputy Secretary-General, Amina Mohammed.


Here’s how ASX fertiliser stocks are tracking:

Fertiliser stocks missing from our list? Shoot a friendly mail to [email protected]

Wordpress Table Plugin


Nitrogen stocks


Late last year the big gun $7b market cap company announced it would pivot out of urea, aiming to close its Gibson Island operations by December 2022.

Despite this decision to cease manufacturing with natural gas at the end of 2022, the feasibility study into industrial-scale production of green ammonia at GI will be progressed to potentially re-purpose the facility.

IPL says it will still be a leading supplier of fertilisers, with urea, sulphate of ammonia and other specialty products to be sourced from its existing international import supply chains to replace these manufactured products.



The company’s 1.4mtpa project Haber development in WA nabbed Major Project Status from the Australian Federal Government in Feb, with its potential to reduce the carbon intensity of the urea used in Australia by 60%.

“The facility has the potential to deliver significant emissions reduction to Australia’s urea manufacturing sector through the use of advanced ammonia and gas processing technology, as well as dedicated green hydrogen,” Minister for Industry, Energy and Emissions Reduction Angus Taylor said.

“It also aims to reduce the reliance of Australian farmers on international supply chains to enhance our food security, given more than 90 per cent of urea is currently imported.”

However, the successful development of the project is contingent on the $577m market cap company’s proving up of sufficient gas reserves at South Erregulla, the outcomes of FEED on Project Haber, access to finance and securing binding urea offtake agreements.



Leigh Creek is one of the only Aussie companies poised to capitalise on the current fertiliser crisis with its Leigh Creek Urea Project (LCUP).

The company plans to produce as much as 2Mtpa of zero carbon urea via downstream processing of syngas which it will extract using in-situ gasification at the now closed Leigh Creek coalfields of northern South Australia.

The company says the cost of feed gas to the LCUP will be less than A$1/gigajoule, and the average nominal operating costs at the project are forecast to be about A$109/t which means the company will be in the lowest quartile of the global urea production cost curve.

And while the project won’t hit full production until around 2024, LCK is targeting a bankable feasibility study (BFS) for completion this quarter and expects to reach the final investment decision process for the project in the middle of this year.

Leigh Creek has a market cap of $134m and had $8.3m in the bank as at 31 December 2021.




Potash producers



The company said demand increased last year for its Christmas Island Rock Phosphate (CIRP) product, with phosphate and fertiliser sales volumes of approximately 325,000 tonnes for the half year ending 31 December, compared with 290,000 tonnes for the same period last year.

Plus, CII picked up a controlling stake in Kemoil SA, Geneve, a Swiss supply chain logistics business, enabling the efficient flow of commodities – particularly refined oils – between major producers and large customers throughout West Africa.

The company said that was part of its plans to diversify its revenue mix and “bolster our supply chain logistics capability beyond our existing shipping logistics business servicing Asia Pacific.”

And so far the move is looking good, with the Kemoil stake contributing almost $130 million of revenue for the period.



Fertoz ended 2021 strongly, recording record group annual sales of more than 10,000 tonnes and last week the company flagged record forward fertiliser orders and a planned price increase.

“The North American market imports more than 70% of its phosphate from offshore, primarily Saudi Arabia, Morocco and Russia,” executive chairman Pat Avery said.

“This is one reason why all commercial, synthetic fertiliser nitrogen, potash and phosphate in North America is now trading at more than US$1,000 per tonne.

“On a price per P basis, Fertoz is very competitive, with deposits and mining operations all located within North America. Fertoz will implement price increases of between 10% and 15% this spring.

“We continue to focus on educating manufacturers, dealers and growers that especially our rock phos in organic use, but also in commercial fertiliser blends using 30-50% of our rock, can deliver substantial tangible benefits: lower cost, less run off, less salt and chemical buildup in soils, and with the industry’s rising emphasis on carbon, it can significantly reduce every product’s manufacturing carbon emissions.”



Kalium kicked off production at its Beyondie sulphate of potash (SOP) project in WA in October last year.

The company released an operations update this month, flagging some COVID related hiccups but that it expected to have accumulated sufficient ‘start-up grade’ harvested potassium salt (KTMS) by June.

And the re-start of its SOP purification plant is also expected in June, with targeted commercial SOP sales from July.

The project is expected to be operating at an approximate 80Ktpa SOP production run rate by Q1 CY2023, with the targeted 120Ktpa run rate established by Q3 CY2024.

“Our key immediate focus is to maintain ongoing safe operations during the anticipated dramatic escalation in Covid-19 cases in WA, complete the preparation for the resumption of commissioning and subsequent ramp-up activities, and then move into production to benefit from the strong SOP market,” CEO Len Jubber said.

As at 28 February 2022, Kalium Lakes had around $48 million in cash and $176 million of drawn senior debt facilities with NAIF and KfW – but said that with its revised production ramp-up schedule it will require further external funding by Q3 FY22.

It’s worth noting that Kalium’s stage one production is already tied up in a 10-year offtake deal with German fertiliser king K+S, which currently supplies more than 60 per cent of the Australian and New Zealand SOP markets.

Plus, competitor Salt Lake Potash (ASX:SO4), went into receivership owing US$127 million last year after its plans to start production at its SOP plant in the WA were delayed.



Near-term potash players



The company kicked off construction of its Mardie project in WA last month, which it says will produce 5.35 million tonnes of salt and 140,000 tonnes of SOP each year when it’s operational.

MD Alwyn Vorster said the project will “ultimately include a 100km2 evaporation pond and crystalliser system, two processing plants and a new export facility which will produce 5.35Mtpa of salt and 140ktpa of sulphate of potash fertiliser, driven sustainably by inexhaustible seawater and 99% natural sun and wind energy”.

“We aim to complete construction of Pond 1 and fill it with seawater within six months which will represent the commencement of production and keep us on track to achieve first salt sales in late 2024,” he said.


The Spanish player’s two-phase Muga project is expected to produce 1 million tonnes of potash per annum at half the capital expenditure intensity of other potash producers.

Economics are similarly robust with net present value and internal rate of return of €1.97bn ($3.1bn) and 25 per cent respectively while earnings before interest, taxes, depreciation, and amortisation is estimated at €310m.

This quarter the company is aiming to secured financing and progress towards construction of the project.

HFR had cash at bank as at 31 December 2021 of $22.24 million.



The company reckons its Mackay potash project will be the world’s lowest cost producer of SOP with a forecast total cash cost of US$159 per tonne – and that it will be shovel-ready this year.

Last week CEO Mark Savich said multiple FEED programs are underway with project approvals well advanced.

“Potash supply is being affected significantly given Russia and Belarus account for approximately 40% of global supply,” he said.

“In addition to economic sanctions against Belarus, Russia recently announced a ban on fertiliser exports which has further exacerbated very tight market conditions.

“As a result, potash prices across all product types continue to move higher.

“It could take several years for global potash trade flows to normalise and Agrimin is in an excellent position with a Tier 1 potash project in Australia that is on track to be shovel ready this year.”

The company is targeting 450,000 tonnes per annum of production from the project, which has an initial mine life of 40 years.



This month the company finalised the DFS design for its Cabinda Phosphate Fertiliser Plant in Angola, Africa.

The plant has been designed with an initial production capacity of 150,000tpa with capability to expand up to 450,000tpa.

And commissioning is expected in H1 2023.

“The company is looking forward to delivering the DFS and Final Investment Decision in the coming months, as we prepare to get into production in the first half of 2023,” CEO Lindsay Reed says.



KP2’s main game is the Kola and DX potash projects in the Republic of Congo (RoC), not to be confused with its neighbour, the Democratic Republic of Congo (DRC).

Kola is a monster project at the pointy end of the development cycle, and KP2 expects H1 of 2022 to be a “very busy period”.

The first key milestone is to finish a study on Kola “to improve the project value, reduce the capital cost and shorten the construction schedule”. Completion is imminent, KP2 says.

A DFS released 2019 envisaged a 2.2 Mtpa MoP operation with a 33-year life. Average annual EBITDA of ~US$585m means it would take 4.3 years to pay back the whopping construction cost of $US2.1bn.

That right — $2.1bn. One of the main aims of the optimisation study currently underway is to reduce the capital cost of Kola to less than $US1.65 billion.

“The company expects to receive the financing proposal from the [financing] consortium 60 days after the study is complete,” CEO Brad Sampson says.

“The delivery of the financing proposal for the full financing of the construction of Kola is a key milestone for our company.

“We are looking forward to the completion of the financing phase and being able to move rapidly into the construction of Kola.”



Near-term phosphate players



This Aussie phosphate rock player said this month that construction has commenced on outstanding non-process infrastructure for the initial production plant at its 800,000tpa ‘Ardmore’ phosphate project in Queensland.

First production of high-grade beneficiated product is on schedule for July this year with first shipment in August.

“Planning and contract discussions are well advanced for production and shipment of five individual 5,000 tonne trial parcels (25,000t total) to be sent to customers for their prequalification,” the company said.

“Negotiations continue with these customers for potential longer term arrangements over the remaining 50% of uncommitted first right production offtake.”