News And Updates
Mother lode for phosphate mining
Published By: Herald Tribune
Mosaic's network of phosphate mines that stretch across rural, central and Southwest Florida are generating record profits this year as demand for fertilizer soars.
Related news Phosphate mining operation | Photos In the past year, Mosaic Co.'s net sales of phosphate, a key fertilizer component, jumped 82 percent, from $690 million to $1.26 billion.
The record sales are sending the company's stock value steeply upward. By close of business Monday, shares were valued at about $124, up from about $54 seven months ago.
But while the company's financial gain cheers investors, it worries Southwest Florida residents who oppose the clay deposits and marred landscapes that phosphate mining leaves behind.
Phosphate mining is concentrated in the Peace River watershed, a valuable drinking water and recreational resource.
Glenn Compton, president of the local environmental group ManaSota-88, said the company is responding to demand for its product by flooding regulatory agencies with proposals for new mines.
"This is the most activity we've seen in 20 years, in trying to get phosphate mines approved," Compton said. He fears regulatory agencies will relax environmental protection due to the volume of paperwork.
Mosaic, however, contends that its phosphate processing plants are running at full capacity, leaving no room for mining more rock than it does now. The company has no plans to increase capacity in response to the rising value of the product, said company spokesman David Townsend.
"We don't want to upset the supply–demand equation," Townsend said.
The new mines the company plans to dig will only replace current mining operations that will soon be depleted of phosphate rock, Townsend said.
Mosaic's financial windfall this year is tied to the increased price of phosphate rather than higher production.
The company's phosphate sales volume did not rise significantly last year, but the price of the processed rock rose by 97 percent, according to an investor relations report published in February.
A ton of processed phosphate sold for $246 in February 2006, compared with $487 a ton this year.
Phosphate's price is being driven by global demand for corn and soybeans, two commodity crops which require fertilizer for high yields, said Edlain Rodriguez, a stock analyst with Goldman Sachs. He could not speak specifically about Mosaic, but Mosaic is the world's largest phosphate producer.
"Farmers are just clamoring for fertilizers," Rodriguez said.
As long as farmers want to boost yields, Rodriguez said, fertilizer companies will continue to see high profits and try to produce as much as they can.
Mosaic may not have immediate plans to ship larger amounts of phosphate out of Florida, but it is expanding operations elsewhere in response to global demand for fertilizer products.
In April, the company announced a long-term plan to mine more potash, another fertilizer component, at sites in Saskatchewan, Canada.
The company foresees continued profits and rising demand as the world becomes more affluent and populous.
"There's been spikes in grain before, but they were supply driven," Townsend said. "This current demand is driven by an increase in consumption the world over."
While Mosaic is enjoying record earnings, Compton said the company should direct more of its money toward cleaning up the clay settling ponds and gypsum stacks left by its predecessor companies.
Compton estimated that roughly 80,000 acres of clay settling ponds still need to be reclaimed.