With global demand for potash hitting an all-time high and doubling the Cornbelt price to $500/st within a year, the need for the U.S. to boost its own production of potash has become more urgent, said Ted Pagano, Founder and CEO of Michigan Potash & Salt Co., Denver, which is seeking to secure nearly $1 billion in financing for the first U.S. potash development in more than 30 years.
Pagano told Green Markets that The Mosaic Co.’s recent decision to immediately shut down a potash mine in Saskatchewan and the European Union’s plan to ramp up sanctions on Belarus are accelerating the need to get the company’s U.S. potash project constructed and running. He said the developments in Belarus and Saskatchewan threaten to disrupt global supplies of potash, a required nutrient for healthy crops.
Pagano said he hopes to get the needed capital for Michigan Potash’s three-year project finalized and its ground broken by the end of this year, if not sooner, at Evart, Mich., which he said is the site of one of the world’s highest-grade potash reserves.
Michigan Potash is now engaged in the comprehensive due diligence financing process to establish assets, liabilities, and commercial potential. The project has been in the works for about a decade (GM Nov. 18, 2013) and would be the nation’s largest potash plant, Pagano said. The company has been involved in an administrative review process with Michigan officials.
The U.S. imports 96 percent of its potash from Belarus, Russia, and Canada, while four entities control 80 percent of the global supply, including Mosaic and Nutrien Ltd., Pagano noted. The U.S. Department of Interior added potash to the nation’s critical minerals list in 2018, declaring it critical for the nation’s economy and food security.
Mosaic announced on June 4 that it had immediately closed two potash shafts at Esterhazy, Sask. (GM June 4, p. 1), shutting them down nine months earlier than planned due to a recent acceleration of brine flooding. Mosaic anticipates its potash production will be slashed by 1 million mt from July 2021 to March 2022 as a result.
With the European Union increasing sanctions on Belarus, a land-locked country in Eastern Europe, as tensions heighten, global potash prices are escalating, further harming growers. Pagano noted that Belarussian potash exports previously have been routed through Lithuania, but now may be forced through Saint Petersburg, Russia.
The latest spike in potash consumption comes off a large downtown in demand that lasted five or six years, said Pagano. “The industry idled or shuttered 11 million tons.”
Michigan Potash has selected Barton Malow Co., Southfield, Mich., the largest union trade employer in Michigan, as its Engineering, Procurement and Construction (EPC) general contractor for the project. An estimated 300 union workers would be needed to construct the project, making it one of the nation’s largest union-supported infrastructure projects. Once it’s completed, about 150 full-time workers would be employed at the industrial complex.
“There’s an absolute need for this. As long as the rock remains in the ground, we will continue to advocate for its necessity. We will continue to advocate for this project as long as it takes. We still have T’s to cross and I’s to dot,” Pagano said.