Phosphate Rock

SIC 1475

Companies in this industry

Industry report:

This category covers establishments primarily engaged in mining, milling, drying, calcining, sintering (heating without melting), or otherwise preparing phosphate rock, including apatite.

The phosphate mineral, which is required by all plant and animal life for existence, is found in more than 150 natural forms. All of the U.S. production of phosphate minerals--and 90 percent of worldwide production--was the sedimentary phosphate rock known as phosphorite, which was largely comprised of carbonite apatite. The phosphate rock mining and preparation industry produced the phosphorus that comprised one of three primary ingredients of agricultural fertilizers.

A substantial percentage of mined low-grade phosphate was used in an untreated state as soil fertilizer. This natural phosphate released its phosphorus content into soils relatively slowly, however, so greater volumes had to be extracted to achieve the same effects as more concentrated processed phosphate fertilizers. Common forms of treated or processed phosphate compounds include phosphoric acid, triple superphosphate, ammonium phosphate, and superphosphate. The harvesting of one ton of wheat required the application of about 18 pounds of phosphoric acid fertilizer, which was usually applied to the soil through irrigation water.

Phosphate rock also provided orthophosphoric acid and elemental phosphorus, which were used in applications such as leavening agents, photographic chemicals, water softeners, oil refining, beverages, insecticides, ceramics, detergents, plasticizing chemicals, and scouring powders. In addition, phosphate rock was widely used as a source of fluorine for making plastics and resins, laboratory dies, refrigerants, solvents, lubricants, and aerosol propellants. Phosphorus also played a role in the production of explosives and fireworks and in steel production. Phosphate rock found in Idaho contained vanadium, which was used as a bonding agent in the manufacture of titanium steel, as a stabilizing agent in steel production, and as a rust-resistant element in high-speed tools.

The mining industry was one of the most capital-intensive in the United States as a result of extremely high costs of acquiring and holding mineral properties, conducting feasibility studies and exploration operations, purchasing and maintaining mining equipment, and developing and operating the mines themselves. Historically, the majority of phosphate rock mined in the United States was extracted from open pits, but the number of underground mining operations gradually increased. Open pit mining was performed by large excavating machines, which stripped the nonproductive overlay known as overburden and removed it from the site. A typical operation involved washing the mined phosphate with a hydraulic jet and pumping it in liquefied "slurry" form to a washing plant. The phosphate was then mechanically graded by size, concentrated, and dried.

Phosphate mining began in Idaho in 1906 and in Montana in 1920. The use of phosphate fertilizers in sugar beet fields first occurred in the western United States in the mid-1930s. The production of phosphate rock grew rapidly during World War II and reached 10.7 million metric tons by 1950. By 1964, 23.3 million metric tons of phosphate rock were produced in the United States. Although worldwide consumption of phosphate fertilizers increased between the 1970s and the 1990s, its growth rate steadily decreased from 5 percent a year to below 2 percent by the mid-1990s.

In 2009, 6 U.S. firms in four states mined phosphate rock ore at 12 sites, compared to 20 firms in 1997. In 2009, an estimated 27.2 million metric tons of phosphate rock were produced with a value of $1.4 billion f.o.b. mine. The United States was the world's leading producer and consumer of phosphate rock but has since been surpassed by China. Over 90 percent phosphate rock is used to produce chemical fertilizers and animal feed supplements. Florida and North Carolina produced 85 percent of the total U.S. phosphate rock output, with Idaho and Utah contributing the rest.

After growing for seven consecutive years beginning in 1993, phosphate rock production in the United States began to wane, plunging from 40.6 million metric tons in 1999 to 31.9 million metric tons, its lowest point in 30 years, in 2001. Although production rebounded somewhat to 36.1 million metric tons in 2002, it dropped to 33.3 million metric tons in 2003. This decline was due in large part to reduced exports to China, where the market for diammonium phosphate (DAP) had weakened considerably. Between 2000 and 2001, U.S. phosphate rock exports plunged from 299,000 metric tons to 9,000 metric tons. By 2003, exports dropped to only 5,000 metric tons.

In 2004 and 2005 mines produced 35.8 million metric tons of phosphate rock and 36.1 million metric tons of phosphate rock, respectively. During 2006 production levels of phosphate rock plummeted to 30.1 million metric tons before declining to 29.7 million metric tons in 2007. Between increased foreign competition, especially from China and India, as well as the rest of Asia and South America, the United States was losing its edge as the world's leading producer, consumer, and supplier of phosphate fertilizers.

One of the most important trends in the U.S. phosphate mining industry in the late 1990s and early 2000s was industry consolidation. Grain surpluses, a worldwide excess supply of phosphate fertilizer, and depressed prices between 1981 and 1986 forced North American phosphate producers to begin seeking greater efficiencies. For example, Potash Corporation of Saskatchewan (PCS) bought two phosphate mines and chemical plants in Florida to complement its existing phosphate complex in North Carolina. The 1996 purchase gave PCS control of approximately 39 percent of U.S. phosphate reserves, the largest in the industry, and made PCS the third largest phosphate producer in the world. Similar consolidation activities by U.S. phosphate mining firms, including the merger of IMC Global and Vigoro, created significant economies of scale within the industry. Several idle mines were purchased and reopened. IMC Global paid $16 million to Agrifos Fertilizer LLC for its Florida-based Nichols Mine, including 6.6 million metric tons of phosphate rock reserves, in 2002. As of 2004, the firm operated five phosphate mines in Florida.

Industry firms also turned to advanced mineral processing technologies like the WPPA manufacturing process, which combined with increased global demand for phosphate-based agricultural fertilizer to create a favorable outlook for the U.S. phosphate mining industry in the early 2000s. Significant increases in phosphate consumption were expected in Asia, Oceania, and South America, and U.S. exports to those areas were anticipated to increase, according to the U.S. Geological Survey.

In 2006 phosphate rock mine production reached its lowest level since 1965, decreasing to 31.1 million metric tons from 36.1 million metric tons in 2005. U.S. production of phosphate rock fell to a 40-year low because of mine and fertilizer plant closures, as well as sluggish exports of phosphate fertilizers, resulting in China taking over as the world's leading producer of phosphate rock. However, the United States held its position as leading consumer and importer of phosphate rock, as well as the leading producer and supplier of phosphate fertilizers.

In the United States in 2006, six firms in four states mined phosphate rock ore, compared to nine firms in 2003. Production from these mines totaled an estimated 30.7 million metric tons of phosphate rock, with a value of $852 million f.o.b. mine. As reserves in Florida diminished, phosphate rock production was projected to decline further. There were an estimated 2,286 workers employed within the industry.

Meanwhile, world production of phosphate rock totaled 142 million metric tons with Morocco responsible for 27.9 million metric tons and the United States responsible for 30.1 million metric tons. China accounted for 30.7 million metric tons of phosphate rock, although the figure did not include production from many small, independent mines. Together, China, the United States, and Morocco accounted for 62 percent of world production of phosphate rock, which climbed to 156 million metric tons in 2007.

Total U.S. tonnage reported for 2007 declined further to 29.7 million metric tons. Increased demand for corn-based ethanol prompted increased corn planting, causing a projected increase of phosphate fertilizers of 3 million metric tons in 2008. In fact, Mark Krall, of industry leader J.R. Simplot Co. reported in The Enterprise that "increased production of ethanol, a corn-based product that can be used as an alternative fuel, has increased the need for phosphate . . . and led to last year being one of the best in Simplot Phosphate's history." The International Fertilizer Industry Association agreed and extended an earlier forecast for phosphate fertilizer consumption to grow an average of 2.9 percent through 2011. During the first quarter of 2008, phosphate rock production climbed 7 percent compared to the fourth quarter of 2007.

Production did, in fact, increase in 2008, reaching 30.2 million metric tons. The price also rose drastically. The world prices peaked early in 2009 at nearly $450 per ton, compared to an average price of $80 per metric ton during 2008. Yet prices soon dropped as demand waned. Average price for 2009 was $117 per metric ton. Toward the end of 2008 and into 2009, the global economic crisis began to affect the phosphate rock industry. Farmers either delayed fertilizer purchases until prices dropped or simply could not secure the credit needed to make fertilizer buys. During 2009 consumption dropped by roughly 22 percent, causing inventories to increase by over 80 percent. In all, production, at 27.2 million metric tons, was at its lowest point since the mid-1960s, and consumption was the lowest since the early 1970s.

Morocco, China, and the United States accounted for about two-thirds of the global production of phosphate rock in the late 2000s, with Morocco alone producing nearly 40 percent of the global supply. The top U.S. phosphate mining companies in 2009 were Mosaic Phosphates Mp, Inc., of Lake Forest, Illinois, with 2009 revenues of $6.76 billion, and PotashCorp. Other industry leaders included White Springs Agricultural Chemicals, Inc., of White Spring, Florida; Agrifos Fertilizer LLC, of Pasadena, Texas; and Degerstrom Ventures, of Soda Spring, Idaho.

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