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9 Top Potash Stocks to Buy and Hold For Decades

Haiden Holmes

Jun 08, 2022 15:24

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Potash is essential to meeting the global demand for higher and improved crop yields, particularly in economies that are still developing. This will continue to fuel the demand for potash over the long run and increase the profitability of potash stocks. Without fertilizer, the globe would require fifty percent more arable land to meet this demand.


Currently, Canada is the greatest producer of potash in the world, followed by countries such as Russia, Belarus, and China. Since the Russia-Ukraine conflict escalates, experts anticipate that potash prices will remain stable in the near future, as "escalating sanctions on Belarus as well as Russia's military involvement in Ukraine" are likely to reduce Belarus's potash supply. Increasing the price of fertilizers could also increase the cost of agricultural inputs for farmers, resulting in increased food prices for consumers.

What is potash?

Potash refers to potassium-based fertilizer, and it is mostly employed to assist the agriculture industry in increasing yields. Potash-grown crops are typical of higher quality, more disease-resistant, and require less water.


Potash is a naturally occurring chemical. However, the amounts of potash in surface-level agricultural soils have been gradually declining due to the intensification of farming techniques. Potassium-rich soils have become depleted over time, necessitating the addition of nutrients by farmers in order to grow sufficient crops. This has necessitated the production of potash elsewhere and its sale to farmers so they can replenish potassium levels in their soils after each harvest.


There are numerous potash sources. Potassium chloride, also famous for Muriate of Potash, or MOP, and potassium sulfate, also known as Sulfate of Potash, or SOP, are the two most common. Potassium-magnesium sulfate, potassium thiosulfate, and potassium nitrate are the others.


The type of potash required depends on the type and location of the crops being farmed. Some crops, such as coconut or potatoes, are more tolerant to chloride, making MOP an ideal fertilizer, whilst others, such as strawberries, are not, making SOP more acceptable.


Potash enhances crop yields on less land, which is essential if the world is to continue to feed itself as the global population continues to grow and people's diets evolve. Therefore, potash demand will increase in the next few years.

An overview of the potash industry

Potash stocks may seem like a dull investment opportunity, but one thing should make you take notice of the industry: The United Nations forecasts that by 2050, the global population will increase by one-third to 9.7 billion. As a result, there is a pressing need to grow more crops to meet the expanding need for food, even as arable land decreases. One of the three most extensively utilized nutrients in fertilizers worldwide, Potash can increase soil fertility and crop yield.


Potash's contribution to resolving the approaching food crisis is a compelling investment thesis for potash stocks. Currently, Potash Corporation of Saskatchewan (POT), Mosaic (MOS -0.22 percent), and Agrium control the U.S. potash markets (NYSE: AGU). In addition, they are the only members of Canpotex, one of the largest marketing associations in the world that handles all potash exports outside the United States and Canada. Given the importance of potash in agriculture, mining giant BHP Billiton would have been a big potash player today if it hadn't had to halt its Jansen potash project due to an industry downturn.


After several years of adversity, the potash industry appears to have finally emerged victorious. Potash prices are stabilizing as demand from key international markets catches up with supply, thanks to the efforts of major producers such as PotashCorp and Mosaic to reduce output over time. The time seems ripe to reevaluate potash stocks, but make no mistake: not all stocks are likely to be profitable. Exemplary: Intrepid Potash (IPI -2.14 percent ).


In the summer of 1790, President George Washington signed the first patent ever given in the United States, which was for a novel method and apparatus for producing potash, the first industrial chemical in the United States. Even though the patent lapsed fourteen years later, potash is still a worldwide important product today. There are currently a significant number of enterprises exploring, developing, and manufacturing potash across the globe. Many potash-focused companies, such as Agrium and Potash, have been bought by larger competitors over the years, limiting investment options. Israel Chemicals, K+S, and Mosaic Company all have large potash operations. Investors seeking a diversified play on Potash may want to explore the Global X Fertilizers/Potash ETF (SOIL), which tracks the Solactive Global Fertilizers/Potash Total Return Index.


Due to low pricing, oversupply, and farmers tightening their wallets, the past few years have been slow for the potash industry. The COVID-19 pandemic is exerting further pressure, but significant players, including potash stocks listed on the ASX, TSX, and TSXV, are optimistic about the long-term future of the potash industry. Potash boosts crop yields and food quality while utilizing less land, which is essential if the world is to continue to feed itself as the global population continues to grow and people's diets evolve. Consequently, the demand for potash fertilizers is expected to increase in the next few years, which may be good news for prospective investors in the industry.

Top potash stocks to watch

1. CF Industries 

Lastly, there is CF Industries. The company is primarily engaged in the production of hydrogen and nitrogen compounds for industrial purposes. Notable examples include goods for clean energy, emissions reduction, and fertilizers. Ammonia sales continue to be the company's principal business, and it is the largest ammonia producer in the United States. In addition, the company intends to increase its capacity to generate green and blue ammonia, which are more environmentally friendly.


The corporation reported its annual and fourth-quarter financial results last month. CF's revenues for the year were $6.54 billion, a significant rise from $4.12 billion in the prior year. This indicates a roughly 37 percent rise in revenue. Sales increased across all segments primarily as a result of increased global demand and diminished supply availability. In addition, the annual net income was $917 million, or $4.24 per share on a diluted basis. Evidently, this is a significant rise from the $317 million and $1.47 respectively from the previous year.


Additionally, CF continues to progress toward its goals to promote global hydrogen and clean fuel economies. It does so via the generation of blue and green ammonia as well as other endeavors. One of which is the development of the first commercial-scale green ammonia production in North America. The project is anticipated to be completed in 2023 at the company's Donaldsonville Complex, where it has already begun.

2. Emmerson (EML)

Emmerson is listed in London and registered on the Isle of Man. The company is focused on the development of the Khemisset project in northern Morocco, a "low capex, high margin" potash production. The miner intends to produce approximately 800,000 tonnes of MOP annually throughout the initial 20-year mine life. According to Emmerson, the pre-production capital expenditures of $406 million are "less than half of its global peer average."


Emmerson is in the process of completing a feasibility study on the project, with the intention of delivering the final report in the first half of 2020.

3. Gensource Potash

Saskatchewan is the location of the Vanguard area and Lazlo area projects of Gensource Potash (TSXV: GSP). The company's primary asset, the Tugaske project in the Vanguard region, serves as its focal point. Once operational, there will be no salt tailings and no need for brine ponds. The ecologically friendly project is anticipated to generate 250,000 tonnes of finished product annually at extremely competitive capital and operating costs.


In early 2020, Gensource Potash CEO Mike Ferguson stated, "Gensource's business model was designed six years ago to expressly become a new and independent potash producer with a fresh approach to potash production." "We are fundamentally inverting every aspect of conventional potash production. Two pillars support our company model, and the primary goal is to be compact and efficient, and the second is to be incorporated vertically."


In September 2021, Gensource stated that agricultural chemical business HELM, Tugaske's offtake, had contributed $50 million in project equity.

4. Mosaic (MOS)

Mosaic extracts and transforms phosphate and potash into plant nutrition. Additionally, it markets and sells its own items worldwide. The enterprise has the capability to produce about 10,500,000 tons of potash annually. Although it is an American firm, the majority of its mines and refineries are located in Canada. The company's newest mine, Esterhazy K3 in Saskatchewan, is scheduled to open in 2024 and will be "the world's largest and most competitive underground potash mine."


Mosaic's North American phosphates facilities are capable of producing 11.7 million tonnes of phosphate fertilizer, while it's South American phosphates operations are capable of producing 10.5 million tonnes of finished concentrated phosphate.

5. ICL (ICL)

Israel Chemicals, sometimes known as ICL, is an Israeli corporation listed on both the Tel Aviv and New York stock exchanges. Since aiding in the establishment of the potash industry in its home country eight decades ago, it has progressively grown into a global enterprise. The largest holding corporation in Israel, Israel Corp, owns somewhat more than 45 percent of the firm.


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The corporation produces nearly one-third of the world's bromine, which is used in agricultural chemicals, dyes, pesticides, and pharmaceuticals. It has become one of the largest suppliers of specialty fertilizers, bromine, flame retardants, and a major supply of pure phosphoric acid.


Its operations include the Boulby mine in the United Kingdom, where the firm has transitioned to producing Polysulphate exclusively. It claims to be the sole provider of this novel and innovative fertilizer.

6. Intrepid Potash 

We shall investigate Intrepid Potash or IPI for short. IPI is an industry leader in the production of fertilizer on a global scale. It is the largest U.S. manufacturer of potassium chloride, often known as muriate of potash. Similar substances serve as an important nutrient for crop growth and as a component in animal feed. In addition, IPI mines potassium, magnesium, sulfur, and water-based goods. All of these factors enable it to serve the oil and gas industry in addition to typical agricultural industries.


As global potash stocks decline, it is expected that demand for IPI's products will rise. Given the magnitude of IPI's operations, IPI stock could be an excellent choice for investors eager to jump on the fertilizer stock bandwagon. Consequently, it makes sense that some are evaluating IPI prior to the release of its fourth-quarter financial results next week. We could examine the company's previous fiscal quarter earnings for comparison purposes.


IPI showed good results across the board in this report. The company's quarterly revenue increased by more than 75 percent year-over-year. In addition, the company's net income and earnings per share both increased by more than 138 percent. CEO Bob Jornadvaz provides insight into the company's present progress. He emphasizes the contributions of greater fertilizer prices, rising oilfield sales, and robust cash flow generation. In addition, Jornayvaz notes that IPI anticipates results from increased price levels throughout the current quarter.

7. Karnalyte Resources

Karnalyte Resources (TSX: KRN) is a company focused on its construction-ready Wynyard potash project in Central Saskatchewan. The project also has magnesium deposits that may be extracted.


The organization has completed feasibility assessments and received environmental approval for the project. Phase 1 production is targeted at 625,000 tonnes per year of high-grade granular potash, and two further phases of 750,000 tonnes per year will ultimately result in annual output of up to 2,125 million tonnes.


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Karnalyte is also investigating the establishment of a small-scale nitrogen fertilizer factory, the Proteas nitrogen project, for which a feasibility study was recently completed. Gujarat State Fertilizers and Chemicals, India's foremost fertilizer and chemical manufacturer, is its largest investor and key partner.

8. Pacific silk road resources group Inc

Pacific silk road resources group Inc, originally Pacific Potash Corp, is a Canadian exploration mining company engaged in purchasing, exploring, and developing potash-focused mineral assets. The company is in the midst of acquiring and investigating its interest in the Brazilian and Canadian properties Amazonas Potash, Provost Potash property, and Roam property. Its Provost Property in Alberta, Canada, comprises over two licenses covering around 40,000 acres. Along with Grizzly Discoveries Inc., the Company maintains a stake in roughly 200,000 hectares of permit applications for metallic and industrial minerals surrounding the Provost Property. Pacific Silk Road Resources Group Inc is publicly traded on both the Toronto Stock Exchange and the Frankfurt Stock Exchange.

9. Sirius Minerals (SXX)

Since its 2010 founding, Sirius Minerals has garnered considerable interest. The firm has been steadily developing the Woodsmith mine in the United Kingdom, which is expected to generate up to 20 million tonnes of polyhalite, the site's unique mixture of potash, annually. It is the greatest reserve of its kind in the world, with more than 2,6 billion tonnes.


However, the project is expansive, costly, and comparable to those created by major mining corporations. This potentially world-class project is in jeopardy as Sirius scrambles to secure the billions of dollars necessary to complete development and avert ultimate catastrophe. It is believed that many of the company's 85,000 retail investors are from the surrounding area.

How to buy potash stocks?

Register with a broker or platform online in order to invest in one or more of these potash stocks.


Compare trading platforms for stocks. Look for a site with cheap commissions, expert ratings, and portfolio tracking features if you are a newbie. Use our comparison table to find the best brokers based on their fees and bonuses.


Create and fund your trading account. Fill out an application with your personal and financial information, such as your ID and bank account number. Utilize a bank transfer, credit card, or debit card to fund your account.


Look for the stock that interests you. Find the stock by its ticker symbol or name, such as NTR or MOS. Investigate its past to determine that it is a good investment that can help you achieve your financial objectives.


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Obtain now or later. Invest immediately in the mining industry with a market order, or use a limit order to defer your purchase until the stock reaches your preferred price. Consider dollar-cost averaging, which involves purchasing at consistent intervals and amounts to stretch out your purchases.


Determine how many to buy. Contrast your budget with a diversified portfolio that helps limit risk during market fluctuations. Depending on your broker, it may be possible to buy fractional shares.


Check on your investment's status. You are now a shareholder in a potash company. Optimize your portfolio by monitoring the long-term performance of your stock and the mining industry as a whole. You may be eligible for dividends and shareholder voting rights that can affect your shares.

Conclusion

Although it is possible to earn from investing in potash stocks, it is important to remember that, like any other investment, potash stocks are not risk-free. These stocks are susceptible to changeable conditions, both in the market and in the mining industry; therefore, you should thoroughly evaluate your choices prior to investing. And if you're new to investing or if it's been a while since you analyzed your investment accounts, compare brokers to ensure that your trading account has the greatest features.