Mineral Reserves and Resources

A reserve is usually defined as a mineral deposit of established extension that is - or could be - profitably mined under prevailing costs, market prices and technology.

A resource is considered to be a deposit of less well defined size which is not now economically exploitable but which could potentially become so, if there was a sufficiently favourable change in costs, prices or technology

The main fertilizer raw materials are energy and hydrocarbon feedstock, phosphate rock, sulphur and potassium salts. It is unlikely that there will be a global shortage of any of the raw materials for the manufacture of mineral fertilizers in the foreseeable future, apart from temporary tight supplies due, for example, to an unexpected surge of demand resulting from a loss of production (for example from the flooding of a potash mine).

ENERGY

World energy consumption seems destined to expand rapidly with the projected growth of the world economy; and this is especially true in the most populous, industrializing parts of the developing countries, for example in China, India, South-East Asia and much of Latin America - precisely the areas where fertilizer use should grow fastest.

The entire fertilizer industry uses less than 2% of world energy consumption, and this is overwhelmingly concentrated in the production of ammonia. The ammonia industry used about 5% of natural gas consumption in the mid-1990s.

About 97% of nitrogen fertilizers are derived from synthetically produced ammonia, the remainder being by-product ammonium sulphate from the caprolactam process and small quantities of natural nitrates, especially from Chile. The production of anhydrous ammonia is based on reacting nitrogen with hydrogen under high temperatures and pressures. The source of nitrogen is the air, the hydrogen being derived from a variety of raw materials, including water, crude oil, coal and natural gas hydrocarbons. The hydrocarbons provide the energy for the energy-intensive process. The high-temperature catalytic synthesis of ammonia from air is by far the main consumer of energy in the fertilizer industry. Nitrogen and hydrogen are universally available and the issue is the availability of energy.

For economic and environmental reasons, today natural gas is the feedstock of choice. The use of natural gas is accelerating rapidly, because of economic factors but also and increasingly due to environmental pressures, which work against other fossil fuels. Natural gas is expected to account for about one third of global energy use in 2020, compared with only one fifth in the mid-1990s. However, processes for ammonia production can use a wide range of energy sources. Thus, even when oil and gas supplies eventually dwindle, very large reserves of coal are likely to remain. Coal reserves are sufficient for well over 200 years at current production levels, and their location is geographically diverse. 60% of China's nitrogen fertilizer production is currently based on coal.

NATURAL GAS

Gas is generally viewed as the cleanest of fossil fuels, with less sulphur, nitrogen oxide and carbon dioxide emissions than both coal and oil per unit of energy produced. Stricter environmental regulations will militate in favour of gas as an industrial fuel in general.

At present natural gas is the most economic feedstock for the production of ammonia, as the West European figures below show.

Approximately 4% of total annual natural gas consumption in the USA and West Europe is used to produce raw materials, especially ammonia. In some countries, however, the use of gas for ammonia production accounts for a large proportion of national gas consumption. In India, for example, this proportion is roughly 40%.

PHOSPHATE ROCK

In 1998, the US Geological Survey estimated that world phosphate rock reserves amounted to about 11 billion tonnes, with a larger reserve base of about 33 billion tonnes. These reserves are concentrated in Morocco.

Almost all phosphate fertilizers are derived from phosphate rock. The "reserves" of phosphate rock i.e. deposits which are or could be profitably mined under prevailing costs, market prices and technology are rather limited. The "resources" which are at present not economically exploitable, but which could potentially become so, are much larger than the 'reserves' and 'reserves base'.

POTASH

Potassium salts occur as underground deposits or in salt lakes. Commercially economic sources are less widely distributed than in the case of phosphate. In fact, both economic reserves and resources are heavily concentrated in two regions - North America, largely Canada, and the former Soviet Union. These regions presently have 85% of known economic reserves, and a similar share of the reserve base. Although potash, like phosphate, is a non-renewable resource, the known reserves and resources are much larger than for phosphate. Nevertheless, over the next 50 years, some potash producers will be obliged to mine lower grade ores, deeper layers or more distant regions.

SULPHUR

Sulphur is found in volcanic rocks, in association with salt domes, in metal ores and as sulphides associated with oil and coal. Sulphur resources are very large. Only a small fraction is economically exploitable at present prices but the economically exploitable fraction of sulphur resources is still very large - 1.4 billion tonnes of S, with a reserve base estimated at 3.5 billion tonnes. At present the production of sulphur in all forms amounts to about 56 Mt of S per annum.

According to the US Geological Survey, "resources of elemental sulphur in evaporite and volcanic deposits and sulphur associated with natural gas, petroleum, tar sands and metal sulphides amount to about 5 billion tons. The sulphur in gypsum and anhydrite is almost limitless and some 600 billion tons are contained in coal, oil shale and shale rich in organic matter, but low-cost methods have not been developed to recover sulphur from these sources."

Some phosphate fertilizer manufacturers can use by-product sulphuric acid from other processes, at a very economic cost.