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Factbox: Potash supply and demand
(Reuters) - BHP Billiton's hostile takeover bid for Potash Corp underscores the bullish long-term outlook for fertilizer and food production, based on population and income growth in developing countries.
Following are some facts about supply and demand in key potash producing and importing countries:
(In U.S. dollars)
Three major producers, led by Potash Corp, mine the country's rich reserves, mainly in the province of Saskatchewan. All are expanding, with BHP planning one giant new mine.
Potash Corp: Nameplate capacity (production under ideal conditions) currently just less than 12 million tons of potassium chloride. Adding 7.1 million tons by 2014.
Mosaic Co: Capacity is 11.7 million tons, adding 2.15 million tons by 2014.
Agrium Inc: Capacity is 2 million tons, adding about 500,000 tons by 2014.
Canada uses more nitrogen and phosphate than potash due to the makeup of its soil and relatively small corn acreage.
Russia's top producers, Uralkali and Silvinit, which will likely merge, more than doubled output in January-May 2010 to a combined 4.1 million tons but remain below capacity.
Brownfield expansion in the former Soviet Union, one of the world's top two producing regions, could add 3 million tons by 2014.
The main greenfield projects will not be online until 2017-18.
Uralkali plans to add 1.5 million tons of capacity in 2012 through "brownfield de-bottlenecking" of one of its mines. Eurochem, which is aiming to become Russia's third biggest potash producer, is launching complex fertilizer production at the Gremyachinskoye potash mine, with 1.3 million tons of reserves, in 2013.
Top consumer of potash, accounting for around 20 percent of global demand.
2010 demand seen at 7 million to 8 million tons.
China is targeting domestic production capacity of 4.5 million tons and output of 3.83 million tons by 2015.
Imports more than 5 million tons of potash annually to meet all of its needs, mainly from Russia and Ukraine.
Imports 90 percent of its potash needs.
Fertilizer and grain traders say the high value of BHP's bid for Potash Corp could help lift supply by inflating the value of often undervalued Brazilian fertilizer assets.
Although analysts believe any increase in domestic output is a long way off, Vale has a potash mine under development in the state of Sergipe and there is a major potash deposit in the Amazon region that has yet to be developed.
Demand expected to rise with expansion of corn acreage.
Potash accounts for about 4 percent of the total fixed cost in running an average 500-acre (200-hectare) corn farm in Iowa that will yield an average 180 bushels per acre.
The total fixed cost for such a farm is $612.50 to produce an acre of corn, according to Iowa State University agricultural economist Mike Duffy.
The total fertilizer cost is $100.64 per acre and potash would account for $23.22 of that total.
(Reporting by Rod Nickel, Nick Trevethan, Euan Rocha, Sam Nelson, Julie Ingwersen, Reese Ewing, Yayat Supriatna and Mayank Bhardwaj; editing by Peter Galloway)
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