Mesa Minerals Limited
Fertilizer Market Context


Overview

In today’s world, the application of fertilizers by farmers to improve the quantity and quality of their crops has become a requisite practice rather than an optional one. The intensity of land use, the demands for higher quality products and the rapidly increasing number of mouths to feed will only allow a select few, who are blessed with farm lands receiving natural fertilization or whose output is very small, to practice agriculture without the application of modern specialty fertilizer products.

This requisite need to complement their lands’ naturally available minerals has increasingly driven farmers to seek individually tailored fertilizers products that are capable of being delivered to the crops in an optimum manner. Up until the late 1990’s, readily soluble fertilizers, comprising the desired elemental mix, tended to be applied to the land by spraying, mechanical granule dispersion or pneumatic granule injection into the soil together with the crop seeds or seedlings.

While this practice in the main worked well, rain events after fertilization always had the potential to wash a high proportion of the nutrients away before they could be taken up in the crops. Unfortunately these nutrients would too often find their way into local streams and rivers, promoting undesirable water plant growth and algae booms, with the result that waterways would often become choked with plant growth and toxins from the algae blooms would periodically kill marine life.

Over the last decade, these problems have increasingly been addressed by a switch to bioleachable slow release fertilizers, delivered to the crops in a very targetted manner, as these are not subject to rapid loss into the water table and local waterways. Importantly, the swing to slow release micro nutrient fertilizers (MNF) allows the farmer far more precise control over the fertilization process and delivers nutrients at a more constant rate to the crops over their growth cycle, factors which combine to reduce the cost of this high cost input to modern agriculture.


MNF Price History

The specification of an MNF product, co-produced with an electrolytic manganese product, will be dependent on a number of factors which include:

  • the elemental make up of the feedstock manganese ore;
  • the configuration of the leach processes employed to generate the electrolyte;
  • the configuration of the processes employed to purify the electrolyte; and
  • any additions to the tailings stream from electrolyte purification that are made to bring the MNF product up to the buyers preferred specification.

As such, there is no specific product price inflormation that can be relied upon as a guide to past pricing trends. However, with the increasing preference seen for bioleachable MNF products, and the overall expansion in demand for fertilizers generally, all fertilizers prices have risen dramatically in recent years as is shown in the following chart and this trend can be reasonably assumed to be a proxy for typical MNF products:

Proxy for MNF Price History


This chart, which was originally published by International Fertilizer Industry Association and subsequent amended by Mongabay shows the dramatic increases that have occurred over the last year for three oil industry derived fertilizers products over and above the solid 50-100% price increases the products experienced over the three prior years. Obviously the price jumps of late are in part related to the price of oil and in part related to specific shortages that may not be long term in nature. However, to some significant degree at least, they are also the result of rising demand for all fertilizer products.

Whilst the short term factors driving the price upward will inevitably reverse, prices are unlikely to return to the levels seen in the 1990’s and the earlier half of this decade due to a combination of more persistent longer term factors including:

  • Continued escalation in demand for food crops;
  • Continued escalation in demand for energy crops; and
  • Higher costs of production of MNF type products driven particularly by the need to utilize lower and lower grade feedstocks in their production.

These higher prices translate into higher priced crop production, and are therefore a real concern for farmers and governments alike. Short of finding huge new deposits of high grade, low cost of production minerals from which to make fertilizers, approaches such as those promoted by Mesa, where ‘wastes’ from other industries can be utilized to produce first quality fertilizer products, can provide an effective means of constraining future raises in fertilizer prices.

For those readers seeking a more in-depth appreciation of the variety of fertilizer products traded today and the individual demand and supply factors that are driving their pricing there are any number of website that can be of assistance. The following few will assist to begin to gather such an understanding:


GMS Price History

With the notable deficiency of manganese as an element in the agricultural soils of many countries, and the overall expansion in demand for fertilizers generally, prices for granulated manganese sulfate (GMS) have risen dramatically in recent years as is shown in the following chart:

GMS Price Trend Chart

While these will always be a demand for a manganese fertilizer in this format, it is less clear how strong that demand will be over the longer term. Certainly, even on the basis of the most pessimistic projections demand would appear likely to remain reasonably strong over the next decade. It is in this context that Mesa is seeking to advance a 25,000tpa GMS project based upon the fines ore make from its manganese lump ore mining project in the Pilbara district of Western Australia.

Once commissioned, this plant could contiue to run independently as a GMS fertilizer plant, could be integrated into a larger manganese electolytic plant complex with GMS produced as a co-product, or could be adapted as the first step in a manganese electrolytics plant process, with GMS ceasing to be produced. The approach to be taken would be determined by the market context for each of the products at the time and the financial Mesa’s capital raising ability.


‘Green’ Production Credentials

A producer of electrolytic manganese dioxide (EMD) or electrolytic manganese metal (EMM) employing Mesa’s patented processes, has the opportunity to produce both MNF and GMS as part of its production process, thus maximizing the use of the ores mined and minimizing the extent of production wastes that require costly long term impoundment to prevent metal ion pollution of the surrounding environment. The type of fertilizer that can be produced by an EMD or EMM producer as a co-product will depend on the minerals contained in the local ore, the process configurations selected (which are variable) and the electrolytic product being produced (ie EMD for alkaline batteries, EMD for lithium-ion batteries or EMM). The important thing is, what was a cost of production and a waste of resources and an environmental liability, can become a valuable second revenue stream, a utilized resources and a product that can enhance food production whilst helping to protect the environment.

It is theĀ Mesa sulfur dioxide leach process that opens up this possibility by presenting the tailing from the electrolytic process in a form suitable for MNF production. Producers of manganese electrolytic products who use conventional processes for treating manganese oxide or manganese carbonate ores do not have this opportunity, although in many cases they could adopt the technology relatively cheaply and very profitably.

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