Emerson PLC’s (LON:EML) primary focus is on developing the Khemisset Potash Project located in Northern Morocco. Potash is a fertiliser used to increase crop yields and improve the quality of plants – it plays a central role in helping feed the world’s growing population. The importance of potash as a commodity within the world economy is set to increase further, representing an opportunity for investors, as outlined by Emerson PLC.
Demand for Potash is Growing
The world’s population is growing at a rapid rate which will significantly increase the demand for potash. In addition, the amount of available farmland to grow food is reducing. “By 2050, we have to produce 60% more food than today,” said Graham Clarke, CEO of Emmerson, who presented at April’s UK Investor Magazine conference. Therefore agricultural productivity per acre must keep improving in order to ensure sustainable food security. This requires the right use of fertilizers, using potash, in order to maximise crop production, Clarke argues. In addition, Emerson’s project is in Africa, which is where most of the world’s future arable land exists.
Potash Price Rising
The prices of cultivated grains are rising while potash continues to grow. Grains including wheat, soybeans and corn which are critical to feeding the world’s population and are reliant on potash for improved yields. “The price of these crops are an indication of the price of potash, and they are continually growing,” said Clarke. Potash demand is set to increase further over the coming decade.
Competitive Advantage
When comparing Emerson’s Khemisset Project to a typical Canadian project it becomes clear that Emerson boasts logistical advantages. By having zero port development costs, low infrastructure costs, and easy mine access, the Khemisset Project operates at an $80/t advantage over its Canadian competitors. This is a result of being in a location with developed infrastructure and advantageous geology. For example, at the Khemisset Project, the deposits are 500m below the surface, compared to approximately 1000m in Canadian projects, and there are no aquifers, making access far easier. The beneficial logistics produces costs of around $35m, whereas a typical Canadian project, with deep shafts going through an aquifer, can cost up to $1bn.
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