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Phosphate fertiliser, phosphoric acid and calcium phosphate (notes)

bulletAlbright and Wilson manufacturing inorganic phosphates.
bulletFertiliser Federation of Australia

Phosphate fertiliser

Some 75 per cent of the Australian market for phosphates (as phosphorus) is supplied by locally manufactured superphosphate with the balance by imports of ammonium phosphates. (The Australian market for phosphate fertiliser is around 350 000 tonnes as phosphorous - equivalent to 4 million tonnes of superphosphate). Imports of phosphate fertiliser have been increasing at around 14 per cent per year to 1 million tonnes, almost entirely as ammonium phosphates.
bulletAustralia imports all its phosphate raw material which has been converted (solubilised) to superphosphate using locally sourced sulfuric acid. (Wesfarmers CSBP is converting from using imported sulfur.)
bulletSome 60 per cent of the world market of 40 million tonnes of high analysis (high phosphorus content) fertiliser is represented by the diammonium phosphate and 10 per cent by the monoammonium form.
Australia has another phosphate deposit at Mt Weld in Western Australia that has been under on-going review for a similar development by Wesfarmers CSBP. It is remote (25 km south of Leonora but less than 100 km east of Murrin Murrin) and 260 million tonnes of the rock (particularly hard) contains about 18 per cent P as P2O5 a carbonatite deposit). (It is relevant to note that WMC produces 500 000 tonnes of sulfuric acid (required to produce phosphoric acid) at the Kalgoorlie smelter to its south.)

In September 1999, Anaconda Nickel signed a letter of intent with Wesfarmers (Western Australia)  to jointly develop a phosphate fertiliser project near the Murrin Murrin nickel project. It aims to replace the A$200 million of phosphate rock (300 000 tonnes) imported by Western Australia. 

Murrin Murrin imports some 500 000 tonnes of sulfur per year. It sells some 130 000 tonnes of ammonium sulfate to CSBP at Kwinana (leaving scope for 370 000 tonnes for backloading). 

Phosphoric acid

Phosphoric acid is an important industrial acid used in the manufacture of fertilisers, for the corrosion treatment of metals and the production of inorganic phosphates especially detergent and food grade polyphosphates. In Australia, phosphoric acid is almost entirely confined to the production of phosphate fertiliser and phosphates by Albright and Wilson (from imported elemental phosphorus).

Fertiliser grade phosphoric acid is manufactured by treating rock phosphate with excess sulfuric acid - a process that produces considerable amounts of waste calcium sulfate. Without commercial application, calcium sulfate represents in effect an imported waste produced in a process with no comparative advantage. Such phosphoric acid is now no longer produced in Australia reflecting production economics that favours the import of high analysis phosphates . These phosphates are produced near phosphate rock mines often integrated with large fertiliser plants.

High analysis phosphate fertilisers

If phosphoric acid is used, either in place of, or in part replacement of the sulfuric acid, a higher analysis phosphate fertiliser is produced called double and triple phosphate. This form of phosphate fertiliser contains more phosphorus (typically to 20 per cent as phosphorus). High analysis fertiliser is therefore more economic at locations distant from place of manufacture or supply. The increase of cropping (in more isolated locations) compared to grazing is therefore favouring the cheaper to transport high analysis fertiliser. To address thsi shift in demand favouring higher analysis fertiliser (presently some 65 per cent of demand for phosphates), CSBP has manufactured phosphoric acid to replace sulfuric acid. The weight or bulk of fertiliser required to apply the phosphorus is less than half the single strength form.

High analysis phosphates are also now imported (especially ammonium phosphates with a high concentration of nitrogen and phosphorus) and often blended with locally produced single strength superphosphate to provide a double strength fertiliser. CSBP also imports phosphoric acid to produce Agras fertiliser (typically 17% N, 8% P and 17%S).

Single strength superphosphate is under considerable competitive pressure from higher analysis forms resulting in flat and even declining demand. It contains typically only 9 per cent phosphorus. Nevertheless, the single strength form, (in contrast to overseas markets where higher strengths are increasingly used), is likely to remain dominant in pasture applications in Australia. For the Australian manufacturers, the technology is simple, the international freight cost saving (some 30 per cent of the fertiliser is made up from water and air through the locally produced sulfuric acid) helps maintain prices, and it provides sulfur for sulfur deficient Australian soils.

Southern Cross Fertilisers

Other information

Southern Cross Fertilisers, formerly owned by Western Mining Corporation (WMC) has invested in a A$700 million ammonium phosphate fertiliser manufacturing plant that employs 250 persons. It began production late 1999.

In May 2006 it was purchased from BHP Billiton as its new owner having acquired the assets of WMC by Incitec Pivot,

Incitec Pivot's paid A$165 million to buy BHP's Southern Cross fertiliser operation in Queensland. Incitec Pivot will now buy back the balance of Orica's 70 per cent shareholding at the institutional price of A$21 a share. Orica is set to realise $857 million from the deal, making a profit of A$399 million which will initially go towards repaying short-term debt to reduce its gearing from 38 per cent to 20 per cent.

 Until then Incitec Pivot has had to import its DAP and MAP because Southern Cross supplies ELF, the opposition.

The deposits were found in 1966 and owned by Broken Hill South and purchased by WMC in 1980 and mined for two years. In 1985 WMC purchased 50 per cent of the Hi-Fert fertiliser distribution company (100 per cent in 1988). Gas was not available until AGL undertook the provision of a gas line from South West Queensland to Mount Isa (see also gas lines in Australia).

The plant is at Phosphate Hill, 150km south of Mount Isa in Queensland. At this location there are two billion tonnes of phosphate rock including mining reserves of 103 million tonnes with an average grade of more than 23 per cent P2O5. Some 2.2 million tonnes rock is mined per year.

A sulfuric acid facility with a capacity of 495,000 tonne pa is being built by a consortium of the Mitsui group and Clough-ABB at Mount Isa from sulfur dioxide produced at Mount Isa copper smelting operations and railed to the Phosphate Hill plant and from Korea zinc at Townsville. (The Mt Isa plant removes 80 (97?) per cent of sulfur dioxide emissions).

Around 84 000 tpa (230 tpd) of ammonia is produced from natural gas piped to Mount Isa from the south-west Queensland gas fields in the Cooper-Eromanga Basin. It also produces 

A fertiliser storage and transhipment facility is at Townsville.

It produces about 0.8 to 1 million tonnes of diammonium phosphate and monoammonium phosphate - about the size of the Australian market and around 2 per cent of world production.

The company has plans to however to double production of ammonium phosphates. In June 1997, the company announced that it would design the plant with the potential to produce 2 million tonnes given interest by Asian buyers. The company indicated concern about the strength of three US producers controlling about one-half the world market of 50 million tonnes.

At an average world price of around US$210 per tonne, the value of production will be around A$300 million p.a. Though its production is about the size of the Australian market, about one half of its production will be exported.

The facilities are producing ammonia and phosphate fertilisers at the lowest cost in the world.

Since commissioning in December 1999, the project only approached full production capacity in September 2000.

With interest in a takeover of WMC by Alcoa, the fertiliser plant will almost certainly be sold off - Wesfarmers a likely buyer with an asking value of A$100 million though some analysts (Australian July 2002)  evalauting it at A$40million.

Marketing of phosphate fertiliser.

In August 1998, an agreement was struck with US Agricultural company Cargill to market up to 500 000 tonnes in markets other than Australia and New Zealand over the next five years. Cargill has a phosphate business in Florida and would be able to provide assistance to WMC.

Local sales will be through HiFert anticipated to be 150 000 tonnes pa. (Hi-Fert is a WMC fertiliser importer and distributor that presently supplies around one-third of the Australian market).
Other sales will be through Pivot (270 000 tpa) and Incitec.

The investment is helped by;
bulletAGL gas line to Mount Isa from the Cooper Basin in South Australia.
bulletSulfuric acid from Mount Isa copper smelters (and Korea Zinc's zinc smelter at Townsville).
bulletMount Isa Mines (MIM) has been under restraint to reduce sulfur dioxide emissions for some time. With an economical outlet as sulfuric acid, it will lift production. MIM will contribute A$25m to the project (and spend A$76 million on sulfur dioxide collecting facilities).
bulletThe Queensland government will spend some $25m on roads and rail.

Technology

Ammonia plant by Linde Australia
Sulfuric acid by Lurgi Australia ??
Phosphoric acid by Mitsui/ABB/Clough
Granulation plant by Fluor Daniel

Editor's comment
The importance of marketing is well illustrated. HiFert as a fertiliser importer and distributor was established more than 10 years before the announcement of its investment. Many manufacturing business start with a partner well established with sales - here WMC created its own "partner".

The sulfuric acid project comes ahead of any specific environmental obligation being imposed on MIM to recover sulfur dioxide from its smelter operations. For MIM, the commercial benefits of the acid phase of the project are that copper production could rise by 10% by avoiding smelter shutdowns when the Mount Isa facilities are upwind of residential areas and the commercial value of the sulfur dioxide.

Outlook

Until the early 1980s, phosphate rock was supplied below open market terms from the British Phosphate Commissioners from Nauru and Christmas Islands (promoting the establishment of many Australia's fertiliser plants). Now with this raw material at international prices, this source of comparative advantage of the Australian producers has been eliminated. Freight savings (using local sulfuric acid and water) therefore provides the comparative advantage.

Phosphate is produced by the Phosphate Island Company that in 1998 produced 587 000 tonnes of phosphate rock valued at A$45million (A$3.4 million after tax).

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Western Australia

Phosphates are an important plant nutrient and is used in detergents, deflocculants, animal feeds and metal treatment. By far the largest application is in fertilisers and around 140M tpa of phosphate rock is produced world wide for that purpose. Australia imports about 1Mtpa of phosphate rock from countries such as Morroco, Jordan and the USA. Christmas Island, north west of Western Australia, has more than 6 million tonnes of low fluorine containing phosphate (about 20 years supply) with interests by Wesfarmers CSBP and Christmas Island Phosphates.

Phosphate fertiliser

Wesfarmers CSBP is the only manufacturer of phosphate fertilisers in Western Australia. During 1992-93, about 76 000 tonnes of phosphoric acid were imported into Western Australia valued at $15 million dollars (ie. $196 per tonne - twice the price of sulfuric acid from which it is made). CSBP manufactures phosphate fertiliser from imported phosphate rock reacted with acid and water under controlled conditions. When sulfuric acid is used, the fertiliser typically contains only about 9 per cent phosphorus and is called a single strength superphosphate.

Mt Weld in Western Australia that has been under on-going review for a similar development by Wesfarmers CSBP. It is remote and the rock is particularly hard containing about 18 per cent P as P2O5. (WMC will be producing 500 000 tonnes of sulfuric acid at the Kalgoorlie smelter to its south.)

In 1998/99, demand for superphosphate was 980 000 tonnes valued at $500 million with 80-85 per cent supplied by CSBP. The company closed the Geraldton operations in 1999, maintaining production of superphosphate (single strength) in Kwinana, Albany, Esperance and Bunbury.

Demand is very sensitive to rural commodity prices and, being moderately persistent, it has the character of capital expenditure for the rural users (contrasting with the more leachable nitrogen fertiliser that requires more regular application) so that demand can double to 1 million tonnes p.a.

The closing down of phosphoric acid manufacture despite substantial and growing imports of high analysis phosphates, suggests uncertain opportunities for its production. Western Australia has a large but geographically isolated phosphate deposit at Mount Weld that has about 18 to 20 per cent phosphorus (as P2O5). It has reserves of 80 million tonnes with a further 170 million tonnes inferred. The major obstacles to its development are claimed by CSBP to be the high cost of transport, infrastructure and its low purity that requires beneficiation. Environmentally driven initiatives to reduce sulfur dioxide emission, suggests this option should be evaluated for a longer term strategic plan for the Goldfields region.

The establishment of a phosphate plant in the Goldfields region could promote the manufacture of higher analysis ammonium phosphate if integrated with the manufacture of ammonium nitrate and/or sodium cyanide as both require ammonia. Such prospects would be contingent on the availability of cheap gas though the recently established sodium cyanide and ammonium nitrate plants operated by ICI at Gladstone in Queensland, use ammonia shipped from the Incitec plant at Brisbane (and even Newcastle, New South Wales). The movement of substantial amounts of ammonia appears not to be an obstacle to the competitiveness of these recently established plants. The transport of ammonia from Kwinana could be considered though the movement of phosphoric acid to Kwinana is perhaps a more realistic option.

Working against its manufacture in Western Australia is that phosphoric acid is an application for growing world oversupplies of sulfuric acid. The decline in the price of sulfuric acid will directly reflect in declines in the price of phosphoric acid. The outlook is therefore uncertain and requires further assessment. Other than the development of a local phosphate deposit, there is no prospect for the manufacture of phosphoric acid (including polyphosphates as produced by Albright & Wilson who now use imported elemental phosphorus).

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