REPORT 41/2003

AN OVERVIEW OF SOUTH AFRICA’S MINERAL BASED FERTILIZERS, 2003

DEPARTMENT OF MINERALS AND ENERGY REPUBLIC OF SOUTH AFRICA

REPUBLIC OF SOUTH AFRICA DEPARTMENT OF MINERALS AND ENERGY

MINERAL ECONOMICS

AN OVERVIEW OF SOUTH AFRICA’S MINERAL BASED FERTILIZERS, 2003

Complied

By

M E Ratlabala

Issued by and obtainable from the Director, Mineral Economics, Mineralia Building,

Cnr Andries and Visagie, Pretoria 0001/ Private Bag X59, Pretoria 0001 Tel : +27 (0)12 317 9000, Fax +27 (0)12 322 3416

DEPARTMENT OF MINERALS AND ENERGY

Director-General Adv S Nogxima

Deputy Director-General Mr N Moloi

Chief Director Mr A Mngomezulu

MINERAL ECONOMICS

Director Mr A J Harding Deputy Director : Industrial Minerals Mr J A G Duval

THIS, THE FIRST EDITION, PUBLISHED IN MARCH 2003 WHEREAS THE GREATEST CARE HAS BEEN TAKEN IN THE COMPILATION OF THE CONTENTS OF THIS PUBLICATION, THE DEPARTMENT OF MINERALS AND ENERGY DOES NOT HOLD ITSELF RESPONSIBLE FOR ANY ERRORS OR OMISSIONS

ISBN 0-9384376-6-1 COPYRIGHT RESERVED

FOREWORD

The purpose of this overview is:

• To outline the history of mineral based fertilizers in South Africa; • To outline the structure of fertilizer industry in South Africa; • To outline the position of South Africa in the World and • To highlight the importance of mineral based fertiliser.

The co-operation of all mineral based fertilizer producers and the Fertiliser Society of South Africa in the compilation of this report is acknowledged with thanks.

April 2003

N VAN AVERBEKE Director

CONTENTS

Page

1. Introduction 1 2. History 1 3. Primary Nutrients 2 3.1 Phosphate rock 2 3.2 Potash 8 4. Secondary Nutrients 11 4.1 Agricultural lime 11 4.1.1 Composition of limestone/dolomite 11 4.1.2 Application in agriculture 11 4.1.3 Sources of limestone 12 4.1.4 Production and consumption of limestone 12 4.2 Sulphur 14 4.3 Magnesium compounds 20 4.4 Gypsum 21 5. Micronutrients 21 6. South Africa’s fertilizer and downstream products 22 6.1 Phosphate rock downstream products 22 6.1.1 Phosphoric acid 22 6.1.2 Single superphosphate 23

6.1.3 Enriched superphosphate 23 6.1.4 Double superphosphate 24

6.4.5 Nitro phosphate 24 6.4.6 MAP and DAP 24

6.2 Nitrogenous fertilizers and their downstream products 25 6.2.1 Urea 25 6.2.2 Ammonium Nitrate 25 6.2.3 Ammonium Sulphate 25 6.2.4 Limestone Ammonium Nitrate (LAN) 25 6.2.5 Ammonium Sulphate Nitrate (ASN) 26 7. South Africa’s consumption of fertilizers 26 8. The structure of South African fertilizer industry 27

1. Introduction Industrial minerals serve many agricultural uses, from soil amendments (lime, potash, perlite, vermiculite) animal feed supplements (magnesia, salt), to micronutrients (calcium borates, sulphur, magnesia). The most important minerals, both in terms of volume and value are fertilizer minerals, phosphate and potash. Phosphate and potash are two of the three main NPK (nitrogen, phosphate and potash) macronutrients required for plant growth. 2. History

Manufacture of fertilizer in South Africa dates back to 1903, when the South African Fertilizer Company (SAFCO) in Durban commissioned the first phosphate plant, using animal bones. Subsequent development of the mining industry necessitated the production of explosives in South Africa and enabled the production of large quantities of sulphuric acid, as a by-product. The sulphuric acid was used in fertilizer production, which became a viable proposition. This led to the commissioning of the Kynoch superphosphate plants at Umbogintwini in 1919, and two years later Cape Explosives (Capex) (originally called De Beers Explosives) at Somerset West. South Africa was dependent on imported fertilizer products, which were mixed and blended with the local products. Import supplies dried up during the Second World War. Price control was introduced as a war measure during the early 1940s and was abolished on 1 January 1984. The original Kynoch and Capex joined forces in 1924 as AE&E, which later became AE&CI, and in the 1960s another factory under the same umbrella was established at Modderfontein. In 1944 the name changed to African Explosives and Chemical Industries, at present AECI Limited. Foskor, a wholly owned subsidiary of the Industrial Development Corporation (IDC), developed the apatite deposit at Phalaborwa in 1951. The Sasolburg oil from coal plant was brought on stream between 1950 and 1960. Raw materials for fertilizer production became available and the Fisons and Windmill fertilizer factories were established at Sasolburg, and the Bosveld factory at Phalaborwa. By 1969 these factories, together with Fisons factory and Milnerton, had became part of Fedmis. Omnia started with distribution of agricultural lime in 1953 and opened its first fertilizer factory at Sasolburg in 1967/68. Three liquid fertilizer plants at Dryden, Danielsrus and Hectorspruit, a second factory at Sasolburg and a phosphoric acid plant at Phokeng near Rustenburg followed this.

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Triomf established its factory at Potchefstroom in 1967. A factory at Richards Bay followed this in the 1970s. In the 1970s Triomf and the non-nitrogen interests of AE&CI joined forces (currently AECI Limited) The lifting of price control on fertilizers in 1984 coincided with several other events. The most severe drought in two centuries, and the coincidence of the worst recession since 1930s had a serious effect on both farmers and fertilizer industry. Sasol Limited, which previously had been a supplier to other manufacturers only, established its own fertilizer company (Sasol Fertilizers) and started marketing directly to farmers in 1984. Triomf and AECI separated their interest. Triomf kept the factories at Potchefstroom and Richards bay, whilst AECI revived the name Kynoch Fertilizers with their factories at Somerset West, Umbongitwini and Modderfontein, which they repossessed from Triomf. In 1986, Kynoch took over the local interest of Triomf. At about the same time an overseas consortium (Indian Ocean Fertilizer (Pty) Ltd, or IOF) took over the Richards bay plant. IOF produces phosphoric acid and soluble phosphates mainly for the export market. In 1988, the operational interests of Fedmis, a division of Sentrachem, were taken over by Sasol Fertilizers, Kynoch Fertilizers and Omnia Fertilizers. During 1990, Foskor became a shareholder in IOF. In 1992 Sasol Fertilizers decided to cease its direct marketing to farmers. In 1993, Kynoch Fertilizers took over the nitrogen interests of AECI. Chemfos (a subsidiary of Samancor), which mined rock phosphate at Langebaan, ceased its activities at the end of 1993. The years 1999 to 2002 were characterised by large-scale rationalisation and acquisitions in the industry. Foskor obtained the entire shareholding in IOF, resulting in the latter becoming a fully owned subsidiary of Foskor, and IOF was changed to Foskor Richards Bay. Norsk Hydro obtained the controlling interest in Kynoch, AECI’s fertilizer division. Sasol Fertilizer, which had been trading as Sasol Agri since 2000, obtained a 100 percent interest in Fedmis of Phalaborwa, which was operated as a 50-50 joint venture by AECI-Kynoch and Sasol Fertilizers. 3. Primary Nutrients 3.1 Phosphate rock Phosphate rock is the term generally used in the industry to describe mineral assemblages with a high concentration of phosphate minerals in the francolite (Ca5.PO4.CO3.OH)3 (F,OH)) – apatite (Ca5(PO4)3F) series. Phosphate rock is the primary source of the nutrient phosphorus, an essential element for all life. Phosphate fertilizers stimulate root development, promote flowering and help prevent diseases and environmental stress. Naturally occurring phosphates generally have a low solubility and need to be converted by chemical processing to a form that can be assimilated by plants. Globally more than 90 percent

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of phosphate rock is used as fertilizers and as an addition to animal feed. Detergent and chemical industries consume the balance. Phosphate is extracted from three main types of deposits; marine phosphorites, apatite-rich igneous rocks, and modern and ancient guano accumulations. Though all three types are developed in South Africa, the igneous deposits are currently the only ones being exploited. The igneous deposits are found in the Phalaborwa complex, Limpopo Province. The apatite is relatively coarse-grained, with a well developed crystal structure, is hard and practically insoluble in water and weak acids such as citric acid; it is unsuitable as a direct application fertilizer and must first be treated with strong acids. Radiation occurs naturally in some raw materials, notably phosphate and potassium. South Africa is fortunate that the total radioactivity of Phalaborwa apatite is lower than almost any other igneous phosphate mineral. The Phalaborwa carbonatite contains two types of apatite ores: foskorite and pyroxenite. The foskorite embodies some 20Mt of ore for each 30m of depth, and has a mean phosphorus pentoxide (P2O5) grade of 8,6 percent, at a cut-off grade of 6 percent. Borehole results indicate that mineralisation persists to a depth below surface of at least 1 000m. The pyroxenite contains 486 Mt of ore grading 6,9 percent for each 30m of depth. A cut-off grade of 5 percent P2O5, to depth for 600m, was used in calculating the reserve base of some 2 500 Mt, which represents the third largest in the World. The Glenover phosphate deposit, located north of Thabazimbi, in Limpopo, is associated with a smaller carbonatite pipe. High–grade phosphate ore from Glenover was mined out in the past. The deposit then lay dormant for many years, but has recently been re-opened. Sedimentary rock deposits are of biological origin (particularly marine fauna), and are formed after chemical breakdown of bones, animal manure and phosphate-enriched rocks. This apatite (sometimes called phosphorite) is less crystalline, practically amorphous and more soluble than crystalline apatite; it dissolves partially in diluted weak acids, such as citric acid, and in beneficiated and finely milled form, and can be used directly as a phosphate fertilizer, especially in acid soils. Sedimentary phosphorites, occur to the north and west of Langebaanweg, on the west coast near Saldanha Bay in the Western Cape. The phosphorites comprise old beach deposit containing shells, bones and sands enriched by seepage from overlying guano deposits. The formation consists of aluminium-iron-rich phosphates mixed with weathered parent rock. Resources are estimated at 66 Mt grading between 6 and 9 percent P2O5. The deposits were mined until 1994, and Foskor has recently installed a pilot plant to test the remaining reserves.

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Rich deposits of phosphorite cover extensive areas of the continental shelf of the west and south coasts of southern Africa. Resources of phosphorite nodules between Cape Town and Port Elizabeth and between Cape Town and Lamberts Bay are estimated at 8000 Mt, grading 10 to 20 percent phosphorus pentoxide. Fig. 1: WORLD PRODUCTION OF PHOSPHATE ROCK, 1993 – 2001

Total world production of phosphate rock was 145 Mt in 1993, but dropped by 18,6 percent in 1994 to 118 Mt. This was mainly caused by political and economic changes in various regions. Political and economic restructuring in the CIS impacted negatively on phosphate rock demand in that region. Production started to increase from 1995 onwards reaching a high of 153 Mt in 1997. This was a result of improved demand for fertilizers. Production decreased further from 1998 until 2001 when it reached a low of 127 Mt. This was attributed to low demand for fertilizers. (See figure 1) The USA has dominated world phosphate production for the past decade contributing 26,8 percent of the world total in 2001, followed by Morocco at 17,2 percent, China at 15,6 percent and Russia at 8,2 percent. Morocco and China compete for second position. South Africa is ranked ninth with 1,9 percent of the World total production (see figure 2).

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Fig. 2: WORLD PRODUCTION OF PHOSPHATE ROCK BY COUNTRY-2001 Foskor is the only operating phosphate producer in South Africa. Foskor was established in Phalaborwa in 1951 with the aim of rendering independence to the South African fertilizer industry. The Phalaborwa Complex, within which the Foskor deposit is situated, is a 2000 million year old carbonatite pipe. The complex is unique as it hosts many valuable minerals, the most important of which are phosphate, copper, zirconium, iron and vermiculite.

Fig. 3: SOUTH AFRICA’S PRODUCTION, LOCAL SALES AND EXPORT SALES

OF PHOSPHATE ROCK

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South Africa’s production of phosphate rock exceeded 3000 kt before 1993, and has since varied between 2500 and 3000 kt/a. The 1993 decrease was attributed to the closure of the Langebaan deposits, and Foskor’s production declined by 20 percent as a result of poor international demand. Local sales reached a low of 1 484 kt in 1994 and increased from 1995 onwards and reached a maximum of 2 591 kt in 2001. This was attributed to the IDC’s (Industrial Development Corporation‘s) decision to add value to phosphate by exporting beneficiated products. According to Foskor all exports of phosphate rock will be phased out in the coming year or two. Phosphate rock from Foskor will be sold to Foskor Richards Bay, which will manufacture phosphoric acid for exports. This explains the decrease in exports of phosphate rock. (see figure 3) Fig. 4: SOUTH AFRICA’S IMPORTS OF PHOSPHATE ROCK CONCENTRATE

South Africa’s phosphate rock imports were below 300 kt prior to 1994. Imports increased by 95 percent in 1994 to reach 625 kt, this was mainly due to the shortfall caused by the closure of the Langebaan phosphate mine, mentioned above. This shortfall brought the increase in production of phosphate in 1995, which led to a decrease in imports by 22,8 percent to reach 482 kt, and an increase in exports. (See figure 4) After reaching a maximum in 1994 imports of phosphate rock have decreased and are intended to reduce to zero in the near future. Of all imports of phosphate rock in 2001 99,8 percent was imported from Togo, 0,1 percent from USA and 0,02 percent from Uganda, with other countries sharing the remaining 0,12 percent.

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South Africa’s production of phosphate rock does not meet the demands of the local market. Imports of phosphate have decreased drastically in 2001 by 48,0 percent. Imports are expected to increase in 2002 due to the increased phosphoric acid capacity of the Foskor Richards Bay plant. Foskor‘s extension 8 project at Phalaborwa is not yet working at full capacity, resulting in shortfall in supply of phosphate to the plant in Richards Bay. This will lead to temporarily increased imports to cater for the shortfall in production. This situation has been magnified by the rail transport problems affecting most bulk mineral exporters. Lack of availability of rolling stock has over the past few years caused a problem supplying Foskor Richards Bay with raw materials from Phalaborwa. Foskor started mining the foskorite ore zone in 1954. Palabora Mining Company Limited (PMC) was formed in 1957 to exploit the non-phosphate minerals copper and vermiculite in the carbonatite complex, while Foskor retained the rights to the phosphate minerals in the entire Phalaborwa Complex. Today, as a result of various agreements between the two companies, Foskor recovers phosphate from a portion of PMC’s tailings (40 percent) and from foskorite ore mined by PMC and stockpiled for Foskor (40 percent). Foskor also has an open-cast mine in the north-western part of the pyroxenite region from which it mines pyroxenite for the production of high-grade phosphates (20 percent). Foskor’s extension 8 project has been commissioned, and although currently having some minor problems will increase plant capacity by 750 kt per annum. The new plant advances Foskor’s capacity to a combined 3,85 Mt of phosphate rock a year from both old and new plants. At this rate, proven resources in the existing mine will last at least another 18 years, and total ore reserves another 75 years. Foskor and Indian Ocean Fertilizers (IOF), owned by the parastatal Industrial Development Corporation (IDC), have been combined into a single operating company, with IOF becoming Foskor Richards Bay. Foskor’s 2,1 Mt/a phosphate rock mine at Phalaborwa will be resized to cater for internal demand from Richards Bay and three domestic customers, which collectively consume a million tons a year. An expansion project at Foskor Richards Bay was completed in June with the R1, 5 billion price tag down to R1 billion, which considering depreciation of the rand over the past 18 months, was a significant achievement. Output from the plant will be increased from 450 kt to 780 kt a year and 85 percent of production is destined for exports. Foskor has captured a 25 percent share of the Indian phosphoric acid market and, based on capacity, is the second largest supplier of phosphoric acid to world markets. Steps taken over the past two years leave Foskor ready for privatisation. The group is able to offer value to a partner of international standing, which could enhance Foskor’s technology process or assist with market penetration.

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The Glenover phosphate deposit is being worked by Fer-Min-Ore, and it is planned to start full operation mid 2003. The phosphate rock is further processed locally by Sasol Agriculture (previously called Fedmis), Foskor Richards Bay (previously known as Indian Ocean Fertilizers), Kynoch Fertilizers and Omnia to give the following products:

• Phosphoric acid, by reaction with an excess of sulphuric acid (by-product of the mining industry and also produced from imported and local sulphur) and filtration of gypsum;

• Single and double super-phosphate fertilizers, by acidulation with sulphuric acid and phosphoric acid, respectively;

• Nitro phosphate fertilizers, by acidulation with nitric acid. 3.2 Potash Potash is the term used for commercially supplied potassium-bearing ores and processed products. Sylvite/sylvinite, kainite, carnallite and langbeinite are the most important potassium bearing minerals. Potassium (K) is present in every living cell both plants and animals, is a primary nutrient, (along with phosphorus and nitrogen) which is necessary for virtually every aspect of plant growth. K is the third most widely used fertilizer nutrient after nitrogen and phosphorus. Fertilizers account for more than 95 percent of total potash consumption. Potassium chloride, sourced from sylvite and also known as muriate of potash (MOP), is the most common source of potassium (K) for fertilizers and has a K2O content of 60 percent minimum. Other forms of potash include potassium sulphate with 50-54 percent K2O content, potassium magnesium sulphate with 22-30 percent K2O content Potassium regulates water balance, the activity of many enzymes, starch synthesis, nitrogen uptake and protein production. Potassium also helps to facilitate sugar movement trough plants and boost resistance to stress such as drought and diseases. World production of potash was estimated at 27 400kt in 2000, which is 12,8 percent lower than the highest production level ever recorded of 31 429 kt in 1998.World potash production started decreasing in 1989 and reached a low of 20 928 kt in 1993, which was 33 percent lower than the 1998 level. The consecutive decrease in production from 1989 to 1993 was due to market oversupply and increased rail tariffs in Russia and Belarus (CIS). This led to a decrease in demand and consequently production in that region decreased. Producers in Canada were operating at between 40 to 80 percent capacity to avoid oversupply, while some producers in Germany closed down. Demand in the Eastern Europe continued to decline resulting in excess supply of potash to Western Europe. (See figure 5)

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Fig. 5: WORLD PRODUCTION OF POTASH

Production increased by 7,6 percent in 1994 to 2 512kt, as a result of increased demand and low production during the previous years. World production of potash is dominated by Canada at 33,4 percent of the World total followed by Russia at 16,7 percent, Belarus at 13,3 percent and Germany at 12,7 percent. World total exports of potash in 2001 were 33 486kt, with Canada dominating the World at 45,2 percent of World total followed by Russia at 17,2 percent, Germany at 8,5 percent and Belarus at 8,5 percent. (See figure 6) South Africa has no currently viable sources of water-soluble potassium minerals, potential sources generally contain less potassium than the ores exploited in other countries. Sources from seawater would have to be subjected to chemical treatment to render them water-soluble. Phlogopite, occurring in association with vermiculite ore, in the pyroximite of the Phalaborwa complex is the most promising potential source in South Africa, because of its relatively high (11 percent) K2O content. The material decomposes more easily than do other silicates materials.

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Fig. 6: WORLD POTASH PRODUCTION BY COUNTRY 2001

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South Africa imports all its potash demand. South Africa’s imports of potash from 1994 to 1998 were fairly constant. Imports increased from 1998 to 2000 with a peak of 349kt in 2000 as a result of floods, which caused excessive loss of topsoil.

Fig. 7: SOUTH AFRICA’S IMPORTS OF POTASH, 1994-2001

South Africa’s imports of potassium chloride amounted to 243 kt in 2001, 22,8 percent was imported from Belgium 21,6 percent from Israel and 20,4 percent from

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Russia. Other imports were from USA 15,4 percent, Latvia 8,7 percent and Belgium at 7,6 percent. (See figure 7) South Africa’s imports of potassium sulphate were 26kt in 2001, where 55,2 percent was imported from Belgium, 18,7 percent was from Chile and 22,9 percent was from Germany. The other remaining 5 percent was from France, Mauritius, USA and United Kingdom. 4. Secondary nutrients

4.1 Agricultural lime Among the foremost essential of any modern industrial community is a good supply of limestone. Limestone is known for its main application in the cement and metallurgical industries in South Africa. In most cases limestone is referred to as lime. The term “lime” refers to quicklime CaO, which is calcined limestone and slaked lime (Ca (H2O)), the hydrated form. Limestone (CaCO3) and its derivative lime (CaO) find more applications in industry than any other natural product. 4.1.1 Composition of limestone/ dolomite Pure limestone is composed entirely of CaCO3 but usually contains a variable amount of impurities such as dolomite, quartz, silicate and iron oxides. The magnesium contents vary from zero to 46 percent. There are different types of limestone, which are classified according to CaCO3 and magnesium carbonate content.

• Dolomitic limestone: CaMg (CO3)2 consists of 35 – 46 % MgCO3 • Calcitic limestone: CaCO3 consists of less than 15% MgCO3

When molecular proportion of magnesium and calcium carbonate are equal the rock is called dolomite or dolomitic limestone. Calcitic limestone is pure calcium carbonate with a minimum of 70 percent CaCO3 content. Lime is a derivative of limestone, and is manufactured by burning limestone at 850 °C to 1100 °C yielding carbon dioxide as a by product. 4.1.2 Application in agriculture Agricultural limestone performs many wonders in the soil. Dolomitic material is used to stabilise acidic soils whereas calcitic material is used on alkaline soils. Agricultural limestone is the principal source of calcium and magnesium, essential elements for growth of plants, and acts as a soil amendment that improves soil

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structure and reduces acidity. Calcium aids root development and helps the formation of healthy root cell walls; the transportation of carbohydrates and water, and the production of healthy seeds, and promotes biological activity in the soil. Improved soil structure and reduced acidity promotes a better uptake of the three principal fertilizer nutrients (NPK) by plants. 4.1.3 Sources of limestone Agricultural limestone is a cheap soil amendment, which is easily sourced from locally available limestone. South Africa has huge primary deposits of dolomitic limestone with reserves of exceeding 2 000 Mt. South Africa has 24 limestone producers and 43 quarries. Among these quarries, 13 produces dolomitic limestone and 4 produces calcitic limestone, the others produce limestone for cement, metallurgical processes and chemical use. 4.1.4 Production and consumption of agricultural limestone South Africa’s production of limestone has been at an average of 19 Mt for the past 10 years, reaching a maximum of 21,2 Mt in 1996 and a minimum of 18,8 Mt in 2001. Most of South Africa’s production is sold locally and the rest is exported to SADC countries (Zimbabwe alone consumes more than 50 percent). Agriculture is the third largest consumer of limestone in South Africa at 8 percent of total production, it follows Cement at 70 percent and metallurgy at 15 percent. Other users are the chemical, paper and sugar industries and water purification (See figure 8). South Africa consumes on average 1,2 million tons of agricultural limestone per annum. Where 29,3 percent is calcitic limestone and 70.7 percent is dolomitic limestone.

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Fig. 8: SOUTH AFRICA’S CONSUMPTION OF LIMESTONE PER SECTOR

The larger proportion of dolomitic limestone is attributed to the fact that South African soil is acidic, therefore it needs alkaline material to reduce the acidity. Acidic soil is a major limiting factor in achieving sustainable food production. South Africa’s consumption of limestone was not stable for the past ten years, consumption reached a minimum of 0,8 million tons in 2000 and a maximum of 1,2 million tons in 2002. Consumption of calcitic limestone has been stable since 1994, and reached a minimum of 254 kt in 2000 and a maximum of 436 kt in 2002. While consumption of dolomitic limestone was not constant for the past years it reached a minimum of 571 kt in 2000 and a maximum of 1,03 million tons in 2002.

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Fig. 9: SOUTH AFRICA’S LIMESTONE CONSUMPTION 1994-2002

Note* Statistics used in fig 8 and 9 are from Fertilizer Society of South Africa

A decrease in Agricultural limestone consumption led to the management committee of Fertilizer Society of South Africa (FSSA) to initiate a project in 2001 in an attempt to quantify the status of soil acidity and how it affects sustainable food production. They also urged the Department of Agriculture to promote the use limestone in agriculture, to improve South African soil. This project started yielding results (See figure 9), and consumption increased by 29,4 percent in 2001 and by 37,4 percent in 2002. Limestone consumption is forecast to remain stable at around 1.4 million tons for the next year or two and then increase. As weather is one of the determinants of consumption, the ongoing droughts and floods in different parts of the country will have an effect on limestone consumption. 4.2 Sulphur Sulphur serves two main functions in agriculture. By far the largest is in the form of sulphuric acid for producing phosphatic fertilizers, through a reaction with phosphate rock. Sulphur is often called the fourth major plant nutrient after NPK, because most crops require as much S as P, with an average removal rate by crops of between 40-75 kg SO3/ha. Sulphur performs many important functions similar to N in plants. Sulphur is vital for the synthesis of proteins, oils and vitamins and promotes nitrogen

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fixation and nitrate reduction in plants; is also a key ingredient in the formation of chlorophyll, fights diseases, control pests and lowers the pH of saline and alkaline soils. According to the USGS, World production of sulphur in all forms (SAF) decreased by 2,9 percent in 2001 to 55,5 million tons. Canada was the top producer with 17,1 percent of World output, followed by USA (16,6 percent), Russia (11,5 percent) and others, as shown in figure 1. Canada dominates the World in terms of reserves (9,4 percent of the World total), followed by Poland, at 8,6 percent. (See figure 8) As elemental sulphur is a by-product of the oil and gas industry, global production continued to increase, mainly as a result of higher energy demand. Prices decreased sharply by 36,9 percent during the middle of 2001, to reach $14,5/t FOB Vancouver, reaching their lowest levels since 1973. Prices improved towards the end of 2001, to $16 per ton. Fig. 10: WORLD PRODUCTION OF SULPHUR-IN-ALL-FORMS, 2001

In South Africa sulphur is recovered in the form of elemental sulphur, and ammonium and sodium sulphates from four sources, namely pyrite, metal sulphide smelter gases, coal and crude oil. However, because sulphuric acid is the form in which more than 85 percent of sulphur in all forms is used, most of the elemental sulphur is converted to sulphuric acid. NATREF, SAPREF, Engen and Caltex produce elemental sulphur, as a by-product from crude oil refineries, and sulphur is also produced as a by-product of Sasol’s synthetic oil production from coal. Pyrite recovered by floatation as a by-product of gold mining is converted to sulphuric acid. Palabora Mining Company and Zincor also produce sulphuric acid as a by-product from the roasting of metal sulphides.

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South Africa’s total production of sulphur in all forms was above 400 kt in 1993, it decreased in 1994, and reached a minimum of 279,7 kt in 1995. As pyrite is a by-product of gold mining, it followed the same trend as gold production. (See figure 10) Gold production fell from 619 t in 1993 to 523 t in 1995.The reasons for decreased gold production were said to be an increased number of public holidays, labour disruptions and lower pay limits at some operations. Production was also affected by closing down of the Joint Metallurgical Scheme gold mine in 1995. Fig. 11: SOUTH AFRICA’S PRODUCTION OF SULPHUR-IN-ALL-FORMS, 1992-

2002

Production of sulphur from oil refineries increased by 35,6 percent in 1995 and reached 169,3kt in 1996 as a result increased demand for fuel. Sulphur from other sources remained constant until 2001, when sulphur from copper mines increased by 98,5 percent in 2002 to 86,8 kt. This increase affected total sulphur production, which increased by 19,9 percent to 318 kt in 2002.

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South Africa’s sulphur demand is dependant on local production and imports. South Africa’s imports of sulphur show a generally increasing, though fluctuating, trend, with a major increase in 1995. (See table 3)

TABLE 1 - SOUTH AFRICA’S PRODUCTION, CONSUMPTION, AND LOCAL PRICE OF ELEMENTAL SULPHUR, 1994 - 2001 YEAR

PRODUCTION

CONSUMPTION

PRICE

For acid production

Non-acid use

kt Kt kt R/t (FOR) 1994 209 504 87 215 1995 233 673 87 265 1996 232 693 106 299 1997 256 678 100 326 1998 178 763 84 375 1999 139 662 88 439 2000 184 682 98 420 2001 123 695 100 450 TABLE 2 - SOUTH AFRICA’S PRODUCTION AND LOCAL SALES OF PYRITE,

1994 – 2001 YEAR

PRODUCTION

LOCAL SALES

Mass Value (FOR) kt S kt S R’000 R/t S 1993 323 272 54 575 201 1994 252 243 64 813 266 1995 158 152 63 488 418 1996 184 161 77 326 480 1997 167 163 97 194 596 1998 152 173 89 565 564 1999 141 144 85 408 593 2000 146 142 90 687 638 2001 150 158 97 704 619

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TABLE 3 - SOUTH AFRICA’S IMPORTS OF SULPHUR, 1994 – 2001 YEAR

CRUDE/UNREFINED

SUBLIMED & OTHER

TOTAL

Mass Value (FOB) Mass Value (FOB) Mass Value (FOB) kt R’000 R/t kt R’000 R/t kt R’000 R/t 1994

363

50 820

140

0,750

3 551

4 735

364

54 371

119

1995 602 118 577 197 1,000 3 844 3 844 603 122 421 1491996 526 88 040 167 0,770 1 620 2 103 527 89 660 2031997 540 85 505 158 0,659 1 527 2 317 541 87 032 1701998 531 95 347 180 0,291 995 3 419 531 96 342 1611999 697 142 193 204 0,244 756 3 098 697 142 949 1812000 700 201 465 288 0,228 995 4 362 700 202 460 2892001 678 107 640 159 0,151 954 6 318 678 108 594 160 Source: RSA, Commissioner for South African Revenue Service, 1994 – 2001 The world is faced with increasing nutrient imbalances. While the use of sulphur fertilizer is expanding worldwide, supply may not be sufficient to keep pace with the uptake of this vital nutrient from the soil. Increasing S removal by higher crop production and the reduction in SO2 emissions, as well as changes in availability in S-containing materials, has led to rapidly rising sulphur deficiencies in agriculture throughout the world. For example sulphur deposition in the United Kingdom has fallen to less than 25 kg SO3/ha, at about 15 percent of the 1980 level, leading to large areas of sulphur deficiency. The increased trend towards using high-analysis fertilizer containing little or no sulphur and declining levels of soil organic matter have reduced soil sulphur availability to levels that are limiting agricultural production. A further factor has been tightened environmental regulations, which have decreased atmospheric sulphur deposition. Such regulations have been applied principally in Western Europe and North America, but are now taking effect increasingly in developing countries. Over 10 million t/a of sulphur is applied to soils world wide through fertilizer, 75 percent of which are in the form of single superphosphate (SSP) and ammonium sulphate. These products continue to be important sources, particularly where their sulphur benefit is recognised. However SSP consumption has declined in recent years, particularly in parts of Asia, and this will exacerbate the need for alternative sources of sulphur. Research and development has been stepped up to produce new materials, and these are gaining market share. The current potential plant nutrient sulphur (PNS) market is estimated to require an additional 8 million tons. With increased food production raising sulphur requirement, the unfulfilled requirement for sulphur fertilizers is expected to increase to between 10-11 million tons by 2010.

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A wide variety of sulphur sources can provide PNS. The major sulphur fertilizers are: • Ammonium sulphate; • SSP; • Potassium sulphate; • Potassium magnesium sulphate; • Elemental sulphur-based materials.

Most manufactures offer specially formulated sulphur-containing N or NPK fertilizers. In China and India, as well as in Latin America. SSP is the most common source; despite the declining trend in consumption in India and China. Ammonium Sulphate and potassium sulphate are two other popular sources of PNS, the latter being well suited for acid-sensitive crops. In certain regions, gypsum and phosphogypsum and elemental sulphur are applied as fertilizers. The use of elemental sulphur as a fertilizer is increasing mainly in the developed world. Two aspects of elemental sulphur emphasise its use as a controlled-release granular fertilizer for permanent pastures and crops:

• It is the most concentrated form of sulphur, thus lowering transport and application costs;

• It offers reserve availability as elemental sulphur is converted to sulphate over time.

Plant nutrient sulphur (PNS) consumption is on a growth path, and is increasingly becoming mainstream. The more widespread adoption of PNS fertilisation, especially in developing countries, will have a major effect on future overall fertilizer demand. TABLE 4 - SOUTH AFRICA’S PRODUCTION AND CONSUMPTION OF

SULPHURIC ACID*, 1994 – 2001 YEAR

PRODUCTION FROM

CONSUMPTION FOR

Pyrite Elemental sulphur

Other Total Fertilizers Mining Industrial use

kt Kt kt kt kt kt kt 1994 792 1 528 359 2 679 1 945 249 300 1995 426 2 038 354 2 815 2 317 192 289 1996 481 2 099 339 2 919 2 144 195 328 1997 470 2 054 324 2 848 2 085 182 287 1998 457 2 216 121 2 794 2 242 169 299 1999 423 2 031 200 2 654 2 317 179 289 2000 423 1 938 211 2 654 2 834 161 277 2001 241 1 840 146 2 227 2 089 150 270

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TABLE 5 - WORLD SPOT PRICES OF ELEMENTAL SULPHUR, 1998 - 2001 MONTH

PRICE RANGE

$/t 1998 1999 2000 2001

Feb 27 - 32 25 - 29 38 - 40 22 - 24 Apr 27 - 32 29 - 31 38 - 40 22 - 24 June 27 - 32 35 - 39 38 - 40 14 - 15 Aug 23 - 28 38 - 40 33 - 37 14 - 15 Oct 23 - 27 38 - 40 33 - 36 14 - 18 Dec 23 - 28 38 - 40 32 - 36 14 - 18 As elemental sulphur is a by-product of the oil and gas industry, global production continued to increase, mainly as a result of higher energy demand. Prices decreased sharply by 36,9 percent during the middle of 2001, to reach $14,5/t FOB Vancouver, reaching their lowest levels since 1973. Prices improved towards the end of 2001, to $16 per ton. Local elemental sulphur prices increased by 7,1 percent, to reach $52,3/t in 2001. 4.3 Magnesium compounds Magnesium compounds are used both as fertilizers and animal feed additives. Magnesium occupies the central position of the chlorophyll molecule in plants with each molecule containing 6,7 percent magnesium. An adequate supply of magnesium enhances the photosynthetic activity of leaves. It also acts as a phosphorus carrier in plants and is essential for phosphate metabolism, plant respiration and the activation of several enzyme systems. The main products used are caustic calcined magnesia and magnesium sulphate. Caustic calcined magnesia is a cheap magnesium fertilizer, though it is not water soluble, but because of this it will not wash off when it rains and is available to plants for a longer period. Epsom salt (Magnesium sulphate) is a fast-acting magnesium and sulphur fertilizer often used as a foliar application to crops, although its high cost is a handicap. Epsom salt is a proven means of quickly eliminating symptoms of magnesium and sulphur deficiencies. Sulphate of potash magnesia is derived from langbeinite, which contains both magnesium sulphate and potassium sulphate. This is one of the most economical means of supplying totally water-soluble magnesium to crops. Magnesite is South Africa’s major source of magnesium compounds. South Africa’s economically viable deposits of magnesite occur as weathering products of rocks with high magnesium contents.

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The main magnesite deposits are in Mpumalanga and Limpopo provinces, i.e., the Malelane area, in the vicinity of Lydenburg, and an area to the north of the Soutpansberg and in the Burgersfort and Giyani districts. South Africa has two operating magnesite mines, Strathmore (owned by Chamotte Holdings) at Malelane, Mpumalanga and Syferfontein (owned by Syferfontein Calcite) in Soutpansberg district, Limpopo. South Africa’s production of magnesite was at 65 kt from 1994 to 2000. Production decreased in 2001 to 34 kt. More than 80 percent of our production is sold locally and the rest is exported to Central Africa and Asia. Most local farmers apply magnesite directly as a fertilizer to crops because it is cheaper than beneficiated ore. 4.4 Gypsum In agriculture, gypsum or land plaster (CaSO4.2H2O) serves similar functions as limestone both as a soil amendment that improves the structure and drainage of compacted clay soils, and it is also added to ameliorate subsoil acidity. The calcium sulphate leaches down into the subsoil where it causes a slight rise in soil pH. In addition, root growth in the subsoil is encouraged by the higher calcium concentration. Gypsum also makes available sulphate sulphur (particularly to corn, cotton, wheat and peanuts), stimulates microorganisms and neutralises sodium compounds. South Africa’s gypsum reserves and production are very small by world standards, although the country is self-sufficient in most of its industrial requirements. South Africa’s gypsum production is in the region of 350 kt to 500 kt per annum, with more than 80 percent used in cement production. 5. Micronutrients A lesser-known group of agricultural minerals are micronutrients. These are a class of naturally occurring agricultural minerals that are essential in plant and animal nutrition, but are needed in relatively small quantities. Micronutrients are blended with primary and secondary nutrients to make a complete nutrient package for plants and animals. There are six generally recognised elements that comprise the category of micronutrients: boron (B), copper (Cu), iron (Fe), manganese (Mn) molybdenum (Mo) and zinc (Zn). Boron occurs as the borate (B4O7) anion in soils. It is involved in cell division, fruit formation, carbohydrate and water metabolism, and protein synthesis and seed development in plants. Lack of boron can lead to deformed and inefficient leaves, as well as poor root development, photosynthesis, fruiting and seed production. Crops that need relatively high boron levels include cotton, peanuts, irrigated corn, root crops, soyabeans and some fruit and vegetables.

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Sources of boron include borax, fertilizer borate, boric acid and ulexite (crude borax ore). Borax is generally recovered by evaporation/crystallisation process from dry lake brines or salt beds, or by beneficiation of mined ulexite ores. Boric acid is made by reacting borax with sulphuric acid followed by filtration and drying. South Africa has no local sources of borates. Borates are imported from the Netherlands and re-exported to other African countries. Molybdenum occurs as an accessory mineral in various types of base mineral deposits, but is not produced in South Africa at present. The only officially declared production of molybdenum in South Africa was 22 t in 1957/8, and one ton in 1964. Presently South Africa is dependant on imports from China, Chile and United Kingdom. South Africa has vast supplies of copper, iron, manganese and zinc.

6. South Africa’s fertilizer and downstream products

6.1 Phosphate rock downstream products

6.1.1 Phosphoric acid South Africa has four operating phosphoric acid producers, Omnia Fertilizers, Kynoch Fertilizers, Sasol-Agri-Phalaborwa and Foskor Richards Bay. Phosphoric acid is produced by a reaction of phosphate rock concentrate with an excess of sulphuric acid (by product of the mining industry and also produced from imported and local sulphur) and filtration of gypsum. South Africa’s production of phosphoric acid has not been stable for the past 10 years. In 1991 production was at its lowest level of 412 kt and it reached a maximum of 839 kt in 1996. Production is expected to increase by 40 percent to reach 1 150 kt in 2003. This is due to increased capacity at Foskor Richards Bay. Local sales of phosphoric acid have been between 300 kt and 400kt for the past 10 years. Production reached a minimum of 254 kt in 1992 and maximum of 446 kt in 1996. Local sales are expected to remain in the 300-400 kt range for the next few years.

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Fig. 12: SOUTH AFRICA’S PRODUCTION AND SALES OF PHOSPHORIC ACID

Export sales have adopted an increasing pattern from a minimum of 105 kt in 1991 to a maximum of 440 kt in 2000. Exports of phosphoric acid are set to increase, as Foskor will no longer export phosphate concentrate but phosphoric acid. (See figure 12) 6.1.2 Single superphosphate Single superphosphate is manufactured by treating phosphate rock concentrate with sulphuric acid, and it contains approximately 8,3 percent water-soluble phosphorus. Apart from monocalcium phosphate, it also contains gypsum (CaSO4). Superphosphate therefore contains three plant nutrient elements, viz phosphorus, calcium and sulphur. 6.1.3 Enriched superphosphate This product is manufactured by treating phosphate rock concentrate with a mixture of sulphuric acid and phosphoric acid, in a process similar to manufacturing single superphosphate, and contains 10,5 percent water- soluble phosphorus. Additional soluble phosphorus is provided by the extra phosphoric acid and the product contains less CaSO4 than the single superphosphate.

0200400600800

1000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Year

Mas

s in

Kt

Production Local Sales Export Sales Total sales

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6.1.4 Double superphosphate (also called triple superphosphate) Double superphosphate is manufactured by treating phosphate rock concentrate with phosphoric acid in a process similar to that used in the manufacture of superphosphate. It contains approximately 19,6 percent water-soluble phosphate. The main difference in this case is that no, or very little gypsum is formed, with the result that the monocalcium phosphate is not diluted with gypsum, and the P content is therefore high. With no gypsum the sulphur content is negligible. 6.1.5 Nitro phosphate Phosphate rock concentrate can also be made soluble by treatment with nitric acid, HNO3. Usually too much acid is used and the excess is then neutralised by ammonification with ammonia. The result is that the nitro phosphate consists of dicalcium phosphate, monocalcium phosphate and ammonium nitrate, therefore a NP-product. This was manufactured as a suspension in South Africa in the past. 6.1.6 MAP (mono-ammonium phosphate) and DAP (di-ammonium

phosphate)

These are the important phosphate fertilizers, and are manufactured by the neutralisation of phosphoric acid with ammonia. MAP contains 11 percent nitrogen and 22 percent phosphorus, whereas DAP contains 18 percent nitrogen and 20 percent phosphorus. TABLE 6 - SOUTH AFRICA'S EXPORTS OF PROCESSED PHOSPHATES, 1992 -

2001 YEAR EXPORTS

kt P2O5

Mono-ammonium Phosphate

Di-ammonium phosphate

Triple super-Phosphate

1992 8,1 47,3 7,6 1993 1,8 60,9 5,3 1994 2,2 62,1 5,9 1995 18,7 88,9 49,1 1996 37,5 98,6 49,1 1997 26,4 47,2 27,2 1998 23,6 78,3 22,8 1999 49,0 82,0 12,7 2000 52,7 72,4 21,6 2001 59,7 55,7 35,6

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6.2 Nitrogenous fertilizers and its downstream products Ammonia is the main source of nitrogenous fertilizers. Anhydrous ammonia (NH3) is important for direct soil application in agriculture and is also the primary raw material of all nitrogenous fertilizers In South Africa ammonia is manufactured by the well-known Haber-Bosch process. The raw materials for manufacturing ammonia are hydrogen gas (H2), which is obtained by the gasification of coal and coke with steam, and nitrogen gas (N2), which is manufactured from air by means of fractional distillation. Sasol Limited supplies more than 90 percent of the country’s ammonia, with the balance coming from Iscor. Ammonia is the basic raw material for the production of nitrogenous fertilizers. The restructuring of Kynoch in 2000 resulted in AECI-Kynoch plants at Modderfontein and Milnerton being closed down. The result is that all urea has to be imported. Sasol Agri and Omnia manufacture LAN locally, while Sasol and Iscor produce ammonium sulphate. 6.2.1 Urea Urea (NH2 CO NH2) contains 46 percent nitrogen. The basic raw materials for manufacturing urea are CO2 and NH3. 6.2.2 Ammonium Nitrate Ammonium nitrate (NH4NO3) contains 35 percent nitrogen. The raw materials for manufacturing ammonium nitrate are ammonia and nitrogen. 6.2.3 Ammonium Sulphate Ammonium sulphate (NH4)2SO4 contains 21 percent nitrogen. Ammonium sulphate is manufactured by petrochemical and metallurgical industries. It is manufactured from by products such as coal and coke gases, as well as diluted ammonium sulphate solutions from the refineries. 6.2.4 Limestone Ammonium Nitrate (LAN) LAN contains 28 percent nitrogen. LAN is not a homogeneous salt or chemical substance but is a mixture of limestone (mainly dolomitic lime, but calcitic lime may also be used) and ammonium nitrate. The product consist of approximately 20 percent finely ground limestone and 80 percent ammonium nitrate.

25

6.2.5 Ammonium Sulphate Nitrate (ASN) Ammonium sulphate nitrate contains 27 percent nitrogen. It is a physical mixture of ammonium sulphate and ammonium nitrate. The raw materials are ammonium sulphate crystals and ammonium nitrate solutions. 7. South Africa’s consumption of fertilizers

The availability of relatively cheap, high quality fertilizers in the heartland of the Highveld grain-producing areas led to rapid expansion of grain production. Fertilizers demand increased quickly from 90 000 tons NPK in 1955 to more than 600 000 tons today. During the 1970s, fertilizer demand expanded at a rate of more than 10 percent per year. This happened at a period of increasing political isolation. Government policy at that time stimulated agricultural production through cost-plus pricing of agricultural commodities in a strictly regulated environment of one-channel marketing. The bubble burst in the early 1980s when a severe drought and sharp increases in the bank-lending rate all but wiped out many farmers’ wealth. The scene was set for a total restructuring of agriculture, from a regulated, supply driven market to a demand driven market economy.

Fig. 13 South Africa’s consumption of N P K fertilizers

0

100

200

300

400

500

600

700

800

900

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Mas

sin

Kt

26

Marketing boards were abolished, and the huge surpluses of maize, which had characterized the expansion phase, disappeared. The most significant result of these changes was the withdrawal of marginal land from crop production and a reduction of the hectares planted to maize. As high levels of agricultural subsidies in the European Union and USA continue to distort international agricultural trade, (which particularly affect less developing countries), future growth in fertilizer demand will have to come from increased food demand stimulated by domestic poverty alleviation and increased household income.

27

8. The structure of South Africa’s fertilizer industry

Raw Materials and Intermediates

Straights and Chemical Compounds

Downstream NPK Compounds + Blends

Ammonia Phosphate rock Sulphur(elemental) (Sasol) Phosphate Concentrate (Sasol)

(Foskor) (Imports) (Glenover Phosphate)

Nitric acid Phosphoric acid Sulphuric acid (Sasol) (Sasol Agri Phalaborwa) (Sasol agri Phalaborwa) (Omnia) (Omnia) (Omnia)

(Kynoch) (Kynoch) (Foskor Richards Bay) (Foskor Richards Bay)

Urea Single Super Phosphate KCl (Imports) (Kynoch) (Imports) (Omnia)

LAN Enriched + Double SP K2SO4 (Omnia) (Omnia) (Imports) (Sasol) (Kynoch) ASN MAP KNO3 (Omnia) (Omnia) (Imports) (Sasol) (Kynoch)

(Foskor Richards Bay) Ammonium Sulphate DAP (Sasol) (Foskor Richards Bay) (Iscor)

Granular Solids Liquids Blended Solids (Omnia) (Omnia) (Omnia) (Kynoch) (Kynoch) (Kynoch) (Sasol) (Sasol) (Sasol) (Others) (Others) (Others)

28