The International Fertilizer Industry Association (IFA) released to the public its Short-Term Fertilizer Outlook 2010-2011 on Dec. 21. The report warns of rising agricultural commodity and food prices, as seen just before the food crisis of 2007-08. It also describes the global fertilizer industry’s response to the challenge of increasing agricultural productivity worldwide. IFA estimates that the industry has invested some US$40 billion in new capacity since 2008 for the three main nutrients (nitrogen, phosphorus, and potassium) in North Africa; West, South and East Asias; and North and South Americas.

IFA said the economic recovery in 2010 was experienced in agricultural markets, with a rebound of agricultural commodity utilization and prices. It said a number of factors have contributed to an upward evolution of crop prices. The first is the heat wave that caused poor cereal harvests in the Commonwealth of Independent States (CIS), including extensive fire damage in Russia, as well as the hot and wet conditions in the Corn Belt of the United States. Second, the grain export restrictions currently in effect in Russia and Ukraine are likely to be maintained until June 2011. Third, demand for ethanol, particularly in the United States, remains high, putting pressure on grain markets. Fourth, the cereal stock-to-use ratio is declining to worrisome levels, with a significant drop in maize and wheat inventories.

“Another food crisis could be looming,” says Patrick Heffer, Director of IFA’s Agriculture Service. “The combination of the weather, trade restrictions, bioenergy growth, and low stocks takes us back to three years ago, when food prices spiralled. Based on the data we have analyzed, we are witnessing a situation very similar to what happened in the second half of 2007, with all agricultural prices going up. Today even cotton and sugar prices are high.”

Following a massive decline in fertilizer sales and consumption in 2009, the speed and extent of the recovery in the first half of 2010 surprised most analysts, leading to an annual increase of 13 percent and 7 percent over 2009, respectively. IFA is projecting growth in global fertilizer consumption of 4.7 percent for 2010/2011 and 3.8 percent for 2011/2012-by then, nutrient application rates would have fully recovered to the levels seen prior to the economic crisis of 2008.

IFA said on the supply side, the rebound in global demand and the near-empty distribution channels at the beginning of the year triggered a strong sales increase and subsequent rising operating rates for all nutrients and raw materials. However, the fertilizer industry will be able to absorb the incremental demand for food, feed, fiber, and energy production thanks to the significant investments it has made. IFA said the industry has learned the lessons of the previous food crisis and is undertaking extensive development projects in order to play its role as a key driver of sustainable agricultural intensification and improved food security. New or expansion projects are underway for: ammonia in Algeria, Egypt, Iran, Qatar, Saudi Arabia, and Trinidad; urea in Algeria, China, Egypt, India, Iran, Pakistan, Qatar, and Russia; phosphate in China, Bangladesh, Brazil, Jordan, Morocco, Saudi Arabia, and Tunisia; and potassium in Canada, Chile, China, Israel, Jordan, and Russia.

Between 2010 and 2015, some 55 urea units, 20 potash expansion projects, and 40 processed phosphates facilities are planned for completion worldwide. In addition to the $40 billion spent on new capacity for the three major nutrients since 2008, IFA estimates another US$80 billion will be invested between 2011 and 2015, with the highest levels of production, sales, and consumption seen to date occurring in 2011.

“Establishing new capacity cannot happen overnight,” explains Michel Prud’homme, director of IFA’s Production and International Trade Service. “This is the reason the industry is planning for the future. Greenfield capacity projects take from three to eight years between the start of construction and commercial production. A large-scale fertilizer facility calls for an investment of between 0.5 and 3 billion dollars.”

Global urea capacity is projected to expand by 30 percent between 2009 and 2014, to 222 million mt. During the same period, world potash and phosphates capacities are forecast to grow by 25 percent and 31 percent, respectively.

IFA says its members are investing in energy-efficiency technology and new products in order to reduce the environmental footprint of their activities. They are also helping farmers make the best use of their products by sharing good agricultural practices. During 2011, IFA forecasts a rebound of sales and robust growth in the sector.

Global nutrient sales for all uses are projected to grow by 2-3 percent in 2011, reaching 220-222 M mt nutrients, with increases of about 3 percent for nitrogen and phosphate products and up to 5 percent for potash.

IFA estimates that construction of a new potash complex, including an underground mine, mill, and infrastructure, could cost between US$2 and US$3 billion for a capacity of 2 million mt. A new ammonia/urea complex with a capacity of 1.2 million mt urea could be completed in 36 to 40 months, at a cost ranging from US$1.2 to US$1.5 billion. A 3 million mt phosphate rock mine in Peru was recently completed after three years, at a total cost of US$450 million.

Tanner Industries Inc., Southampton, Penn., considers all outstanding issues with the South Carolina Department of Health and Environmental Control (DHEC) including a $91,000 fine resulting from the anhydrous ammonia release last year that killed one person (GM July 20, 2009), to have been resolved; however, it is still awaiting results from the investigation of the incident by the National Transportation Safety Board (NTSB).

“We helped in establishing the community advisory board made up of local residents and community leaders and are working with them and other agencies,” Tanner Director of Quality and Regulatory Affairs David Binder told Green Markets. “We installed an additional local sensor and alarm system at the facility and also have worked with the county emergency management and response personnel.”

DHEC’s fine stems from a total of eight federal and state air and chemical safety violations at the Swansea plant that were outlined in an enforcement order signed recently by both the agency and Tanner officials.

According to South Carolina Department of Environmental Quality (DEQ) spokesman Adam Myrick, there was really only one substantive requirement for Tanner in the order, and that was to install an alarm system, which was done before the order was signed. “It’s important to note that the alarm system is not required by regulation,” Myrick explained. “It was requested by residents who live near the facility. Tanner agreed to voluntarily install this equipment and we included it in the order to ensure it was completed. All of the other corrective measures were completed early in the process and resolved well before the order was finalized.”

He added that the department now considers that the corrective actions taken by Tanner allow the facility to operate within their regulatory requirements and all of the deficiencies have been resolved, and the civil penalty, which goes directly to the state’s general fund, has been paid.

The July 15, 2009, release of 7,000 pounds of anhydrous ammonia occurred when a carrier was transferring product to the Tanner facility at Swansea.

“They used an improper transfer hose which failed during their transfer to us,” Binder stated. “NTSB is the lead investigating agency on the whole investigation.”

The hose failure and other events involved in the release are still under investigation by NTSB, public affairs officer Peter Knudson reported. Knudson said the agency expects a final report to be issued in the first half of 2011. DHEC’s fine against Tanner large by agency standards is at least the second penalty nationally against the company over chemical safety preparedness in the past two months. In October, the U.S. Environmental Protection Agency fined a Tanner plant in Rhode Island $149,080 for violating federal regulations intended to prevent chemical accidents.

Stonegate Agricom Ltd., Toronto, announced Dec. 7 that it confirmed intersecting high-grade phosphate on the upper and lower zones of its Paris Hills project in Southeast Idaho after getting assay results on core samples obtained from its initial definition drilling activity on the property.

Stonegate is a private Canadian company engaged in the acquisition, exploration, and development of agricultural nutrient projects, primarily focusing on the development of phosphate ore projects in North and South America.

“We are excited to see such high grades from our own work at the property. If confirmed by additional drilling, the Paris Hills Phosphate Project would rank as one of the highest-grade phosphate deposits in the Americas,” Stonegate President and CEO Mark Ashcroft said.

The company plans to continue drilling activity on the Bear Lake County property in coming months. A pre-feasibility study’s expected completion date is the end of 2011. Assay results and planned beneficiation testing of core samples in the first half of 2011 will be important components of the study.

Stonegate plans to bulk up its diamond drilling capabilities with a second rig in a few weeks, and a third rig is expected in January. A reverse circulation drilling rig also is anticipated to return in January to begin pre-collar drilling for an additional 60 to 75 holes for the second stage of the definition drilling project.

The company plans to collect assay data in larger batches before releasing results in the future. All samples were analyzed by X-ray fluorescence at ALS Laboratory Group in Vancouver, B.C. Trace element data is pending. Internal standards and blanks were submitted with the samples as part of Stonegate’s quality control program.

Major Drilling America Inc., the drilling contractor, has completed pre-collaring 24 drill holes and followed up with diamond drilling to obtain core samples from both zones at 10 of the holes since September.

In the Lower Zone, a hole returned 30.5 percent phosphorus pentoxide over seven feet. The Upper Zone intersected 24.9 percent P2O5 over 16 feet in a hole, including 12 feet of 27 percent P2O5. Also in the Upper Zone, another hole returned a grade of 23.5 percent P₂O₅ over 16 feet. The company said the two holes are about 1,500 feet apart.

In addition to Paris Hills, Stonegate is also developing the Mantaro phosphate project in Peru.

Stonegate completed the purchase of Rocky Mountain Resources Corp.’s phosphate/vanadium property at Paris Hills in November 2009. Rocky Mountain is an industrial minerals and metals exploration and development company based in Vancouver, B.C.

Rocky Mountain received $1 million in cash and six million common shares of Stonegate, valued at 50 cents per common share.

In January 2009, Rocky Mountain announced its phosphate holdings in Paris Hills could sustain mining operations for up to 75 years. It said the estimated 4.6 million tons of ore at 29 percent of phosphorus pentoxide could potentially be mined and directly shipped as feed to a phosphoric acid plant.

Environmentalists opposing the J.R. Simplot Co.’s expansion of its 5,000-acre Smoky Canyon phosphate mine in Southeast Idaho were dealt a pre-Christmas Eve setback by a U.S. Court of Appeals for the Ninth Circuit panel ruling that agencies did not violate federal laws by allowing the mine’s borders to be extended in the Caribou/Targhee National Forest.

Since 1984, Simplot has operated the open pit mine to supply phosphate ore via a slurry pipeline to its fertilizer complex near Pocatello, about 90 miles away. Company officials argued the ore was nearly exhausted and an expansion into the Deer Creek and Manning Creek sections would extend the mine’s life about 15 years.

Capping more than two years of litigation, a three-judge panel in Seattle, with one judge dissenting, decided on Thursday, Dec. 23, that the U.S. Bureau of Land Management and the U.S. Forest Service were proper to permit the mine’s expansion onto federal mineral leases in compliance with the National Environmental Protection Act (NEPA) and the Clean Water Act after reviewing the mine’s potential pollution threat to streams and groundwater.

The ruling was expected to be handed down in January or February after the Ninth Circuit panel heard oral arguments last October. Various Idaho and Wyoming cities and counties, United Steelworkers Local 632, and the Idaho Farm Bureau Association intervened in the case on Simplot’s behalf.

Simplot spokesman David Cuoio said his company was very pleased with the Ninth Circuit ruling and called it great news for employees and eastern Idaho and western Wyoming communities, where Simplot has phosphate mining and manufacturing operations.

A 2009 economic impact study conducted by Idaho Economics, a Boise research firm, concluded if the Smoky Canyon Mine and Simplot fertilizer plant were to close, it would adversely impact 12 eastern Idaho and western Idaho counties by $171 million annually and cost about 600 jobs.

“This means we will be able to continue to provide good-paying jobs that are important to not only our employees and their families, but also to the economies of those communities,” Cuoio said.

“In addition, Simplot will be able to keep mining and processing the phosphate that is an essential crop nutrient for American agriculture as it carries out its work to feed our nation and the world.”

Marv Hoyt, a Greater Yellowstone Coalition spokesman, could not be reached about whether the environmental groups will appeal the Ninth Circuit ruling. They argued that the BLM and Forest Service acted “arbitrarily and capriciously” in allowing the mine’s expansion.

Writing for the Ninth Circuit court, Judge Sidney Thomas stated: “The agencies here not only fully recognized and evaluated the impact of future selenium pollution, they specifically asked an outside consultant about the one concern Greater Yellowstone says they ignored, justifiably relied on the vast majority of experts who said that the model accounted for seasonal variations, and further implemented testing and monitoring to ensure compliance. This is all NEPA requires.”

Dissenting, Judge William Fletcher said the Forest Service and BLM had not done enough to assure the mining operation would not contaminate the area. “Even if the model effectively accounted for seasonal variation in the long term, this alone is insufficient, because the mine expansion project will, at most, extend the life of the Smoky Canyon Mine for 14 to 16 years. The agencies’ conclusions, and the majority’s opinion, leave open the possibility that significant environmental pollution will occur at Smoky Canyon Mine in the near term.”

In a ruling against the environmental groups in August 2009, U.S. Magistrate Judge Mikel Williams noted a cover design for the mine was extensively researched and a quality control program monitored by an independent third party was required. Extensive public comment shaped the plan, he noted. It was the fourth consecutive court ruling in favor of the mine’s expansion since September 2008. The Ninth Circuit court upheld Williams’ ruling.