Thank you anatol. Thats it what i also think. We must bring back to the Board Garry Thomas and Mark Jones, and if Macpherson not will bring fair value to the shareholders he also can go. The problem is that we never bring together the Free float. 0,66$ is a shoot in our heads, the best resource of potash in the world and Elm can expand the resource in all directions. Elm have allready minelife for 22years with highest grades, and this gangsters will accept this offer before it is a binding-offer. Stupid.
Here a view for the potash sector, thats why Dingyi want to buy and Pala control from behind.
Dear member,
Potash is one of the easiest commodities to understand. When going long potash, one is betting on increased food consumption. That's basically it.
There are two undeniable facts that ensure increased food consumption and demand for potash over the long-run: Exploding populations and decreasing arable land on which to produce food.
The global population is increasing and arable land is being destroyed at an alarming pace. To be clear, this doesn't guarantee the price of potash is going to explode and that potash companies will always make money hand over fist, but it does support consistent growth in demand for this commodity. Furthermore, this combination ensures that rising populations will need to grow more food in less space and for that to happen, fertilizer (one primary ingredient in many fertilizers is potash) is a necessity.
With those facts considered - and the weak demand for many other commodities at the moment - our team has become very interested in potash and countries working to increase their mineable potash reserves.
200,000 babies are born every day. Minus the average daily death rate of 75,000 people and the world is left with a net 125,000 daily population growth. In the next 35 years an additional 2.5 billion people are expected to be living on this earth. In addition, millions will be lifted from poverty every year in China and India and will demand a higher quality of food.
When it comes to population growth, it is the rate of increase that has many scientists, economists and farmers in awe. In the last 100 years, since 1900, the world's population has gone from 1.6 billion to over 7.2 billion.
Humans need space and as the global population grows and people spread out, deforestation and destruction of arable farm land takes place. Chances are, if you're not living in a metropolitan city, wherever you live right now used to be farmland 30 to 50 years ago. For farmers to meet quotas and for people to not run out of food, yields must steadily improve from existing crops.
In our view, potash and the agriculture sector are set to outperform many other commodities and sectors in the years ahead. Potash is what we like to refer to as a 'bare necessity commodity' given its link to increasing food crop production.
We, along with many farmers, view potash as the life blood necessary to increase yields and feed the world's growing population. It is suitable for a wide variety of crops. In addition, it adds natural elements back to the soil that have been eroded or simply used up over decades.
PotashCorp. states on its website that:
In the US, more than 45 percent of potash is applied to corn. In China, fruits and vegetables consume half of the potash applied, with rice taking a further 28 percent. In Brazil, almost 75 percent of the potash is used to produce soybean, sugar cane and corn. In Malaysia and Indonesia, oil palm accounts for approximately 70 percent of potash consumed.
To learn more about potash and how it benefits the world's food supply click here.
Needless to say, potash is a multi-billion dollar industry which is growing rapidly.
With just 12 countries producing potash, Canada has become world renowned in this commodity market. Canada, in its Saskatchewan Basin, was one of the first nations to begin economically mining potash. Canada is fortunate to be home to the world's largest reserves of potash. Before attempting to determine where this commodity and the companies hoping to thrive within this sector are headed, let's quickly review how potash is created.
History Lesson
Potash deposits were formed over 200 million years ago through the evaporation of seawater. Salty sea water once covered all major potash deposits on earth. As these regions became cut off from global oceans, the water slowly evaporated and enormous quantities of salt were deposited and mixed with other nutrients.
Conditions during the solar evaporation phase resulted in the formation of deposits rich in potash minerals. The potassium salts left behind crystallized into beds of potash ore. In specific regions of the world, this process would repeat itself over the centuries, building layers upon layers of potash deposits on top of each other.
This process of how potash deposits are formed is important to understand. It explains how tapping into a potash deposit - with as little as one drill hole - can signify a discovery of a large formation or basin. Potash is typically not found in small quantities. When discovered, potash deposits are usually massive given how they were formed (through the evaporation of ocean water).
Click here to watch a great slide show explaining how potash deposits are formed.
Agriculture Connection
As most of you already know, widespread use of potash takes place in the field of agriculture. Upwards of 95% of potash produced globally is used for fertilizer. It has been estimated that without adequate fertilizeres to help increase crop yields, an amazing 1/3 of the world would experience a severe food shortage.
China and India, with a combined population of almost 3 billion, are the top importers of potash in the world. Extreme weather and limited agricultural space in both China and India also contribute to their dire need for potash. Securing food supply and food security is not isolated to India and China, but many countries throughout the world.
The Asia region is the largest consumer of fertilizer in the world. Total fertilizer nutrient consumption in Asia is 58.7% of the world total, the bulk of which is in East Asia and South Asia. Much of the potash and fertilizer that ends up in Asia comes from Canada, Russia and Belarus.
Brazil and Latin America are also huge importers of potash, mainly from Canada and Russia.
Grain and oilseed consumption has been rising at a steady pace in the developed world for decades.
Biofuels Add New Demand
With the recent rise of biofuel usage in North America, increased demand for potash has taken hold. Earlier this year our team released a Volume titled, The Next 4 Years of Energy Investing - below is an excerpt:
In addition, liquid biofuel consumption is expected to quadruple from 1% of US energy needs to 4% by 2035. Even a doubling in the next 5 years, to 2%, will create billions of dollars in new revenue for the technologies and biomass sources positioned to capitalize.
As biofuels continue moving to the forefront here at home, this will add a brand new source of demand that potash companies, and countries competing for the commodity, will have to deal with.
source: USDA, PotashCorp
As grain and oilseeds production rises so will the demand for potash and fertilizers that ensure sustained crop yields.
Potash Tonnes Produced Year over Year:
source: Fertecon, CRU, IFA, PotashCorp
As you can see from the above chart, potash demand on an annual basis has increased from about 40 million tonnes in 2002 to over 55 million tonnes in 2012. PotashCorp has used a 3-3.5% annual increase in demand growth, which has been accurate over the past decade, and suggests the annual global consumption to be over 60 million tonnes by 2016.
source: Scotiabank, Commodity Price Index, March 27th, 2012
Potash had its coming out party just as the global recession took hold in 2008 and 2009. A food crisis spread across the world as prices soared and countries literally ran out of food. Its price has since stabilized above $400 per tonne.
The ScotiaBank Commodity Price Index Report, issued on March 28th 2013, included some interesting comments regarding potash. The report noted that:
Spot prices for potash at the Port of Vancouver eased from US$424 per tonne in January to US$410 in February - likely a bottom. After deferring orders in late 2012, shipments to Brazil and Southeast Asia are likely picking up again, following new contracts signed at lower prices by Canpotex and BPC with China in late 2012 at US$400 per tonne cfr, and then India at a slightly higher US$427 cfr.
Click here to read full report.
Leading potash companies and CEOs believe the bigger story is the dramatic and continuing rise in consumption in many developing regions with large populations and expanding economies. This is confirmed by all data we have seen as demand continues to rise in developing nations.
Potash Corp. recently commented that, "We expect higher potash consumption in China in 2013 as it strives to improve crop yields, which will push up import requirements. We believe Latin America will remain a region of strength and could establish records for both consumption and imports, as farmers ensure their soils have the nutrients required to capitalize on current crop economics."
Supply Issues in Emerging Markets
Brazil set a new record for potash consumption last year (2012) with an intake of 8.1 million tonnes, according to data released by the country's national fertilizer association ANDA.
This is a 9.3% increase year-over year and marks the second consecutive year in which Brazil was the largest potash importer in the world. During 2012, 7.5 million tonnes of potash was imported by Brazil.
Brazil's demand for potash, from a percentage standpoint, is growing faster than any other major consuming nation. Brazil's domestic production of potash has been nothing short of a disaster and has declined in recent years. Without new mines brought into production, this downtrend is likely to continue as Brazil's only domestic operating mine is expected to run out of ore in 2016.
The prospects for potash remain strong and robust. If there was such a thing as a defensive commodity play, our pick would be potash. While its price can be impacted by weak economic growth, the strong long-term fundamentals behind potash can't be argued. Expect more to come from us on this story over the next few weeks.
All the best with your investments.
http://www.pinnacledigest.com/
K2P Price at posting:
46.5¢ Sentiment: ST Buy Disclosure: Held
