Trying to understand the global fertilizer industry of 180 million tonnes is tricky. Even defining a ‘fertilizer company’ can be challenging with companies involved in fertilizer production, processing or distribution or some combination. Even the fertilizer they produce is different. Some focus on potash, others on nitrogen or phosphate, while some produce all three. The industry is constantly in flux, adding to the complexity when trying to analyse it. While consolidation is the general trend, individual companies are constantly buying or selling regional assets, investing in other companies, launching joint ventures or refining marketing arrangements.

The companies see the potential in agriculture and the demand for food continuing and hence the positive prospects for the yield-enhancing function of fertilizer. The energy companies are also involved, with fracking becoming more important, due to high requirements for natural gas and mining.

The nutrients

In general, this market is concentrated, with the top 10 companies controlling about half of the global market.

However, depending on which nutrient you look at, there is wide variation in the levels of concentration. Firstly, it is necessary to look at the different nutrients.

Nitrogen, which accounts for about 61% of the market, has many producers with no one producer or group able or willing to manage supply. Producers are predominantly based across the Former Soviet Union, Middle East, North Africa and Asia and located close to natural gas supplies – the biggest cost in the manufacturing process.

Nitrogen capacity has been expanding in countries benefiting from a large supply of relatively low-cost feedstock, especially natural gas. This encourages new investment and it takes less than three years to build a world-scale plant. Low-cost producers in this volume game continue producing whatever the price.

The collapse of fertilizer consumption in the former Soviet Union in the late 1980s gave rise to large export opportunities for Ukraine and Russia.

The trade of phosphate products is dominated by phosphate rock and processed phosphate fertilizers, such as DAP, MAP and TSP. Morocco accounts for half of the world’s export of phosphate rock, while the trade of processed phosphates is more widely distributed across a larger range of countries, including Algeria, Egypt, Russia, Tunisia and the United States.

Phosphorous (phosphate rock) and potassium (potash) are mined fertilizers and these two essential nutrients account for 23% and 16% of the nutrient market respectively.

Phosphate has become more like potash, with managed supply. In the past decade, Mosaic, the world’s largest producer has acted to rationalise capacity, closing plants to bring supply back into balance and to compensate for the loss of the export market to China.

China was the world biggest importer of phosphates. However, China’s policy of becoming self-sufficient in phosphates was achieved eight years ago. Supply grew faster than demand and the country became a major exporter of phosphates although duties and trade barriers can block exports from time to time.

Potash supply is concentrated, with major producers managing supply through two major supply points – Canada and the former Soviet Union. Over the past decade, Chile has become a large exporter (see case study on P58).

The groups are protected by rules that exempt them from antitrust action. For example, PhosChem operates under the Webb-Pomerene Act of 1918, which relieves some US industries from antitrust laws, allowing them to negotiate prices together to promote exports.

These ‘cartels’ have been a well-documented feature of the international fertilizer industry for more than a century – all to keep both barriers to competition and profits high.

However, things appear to be changing. The recent break-up of PhosChem and BPC highlights the diverging interests of various fertilizer groups as they pursue market share.

Ten companies dominate three different nutrients and almost half of the global fertilizer market.

The five largest companies are still based in North America and western Europe. Irish importers purchase from these giants and simply blend, pack and distribute, taking a margin for the process and selling to merchants and co-ops.

Handling a mere 1.3 million tonnes, the five main fertilizer companies in Ireland fight it out each year for market share in a market that has fallen by almost 400,000t in the past 10 years.

Agrium

Agrium, now the world’s largest fertilizer company by revenue, supplies all three macro nutrients. It had sales of $15.7bn last year and sold 11.5 million tonnes.

Agrium is the largest global agricultural retailer, with almost 1,500 facilities spanning North and South America and Australia. It effectively crosses the entire agricultural inputs supply chain right to the field. Agrium employs almost 16,000 people globally. The fertilizer giant also owns 26% of MOPCO of Egypt.

Yara

Based on fertilizer volumes, Yara is the largest fertilizer company in the world. Last year, it sold 30.1 million tonnes worth $14.3bn. It generated profits of $965m last year.

The Oslo-based company has production on six continents, operations in 51 countries – and sales to about 150 countries. It set a target to increase its production of nitrogen fertilizer by 33% over 2010 levels in just four years. Last year, Yara bought Bunge fertilizer business in Brazil for $750m, helping it achieve that goal.

Mosaic

Mosaic is the world’s third largest fertilizer company with revenues of $9.97bn in 2013 and sells 19m tonnes. Mosaic mines phosphate rock from nearly 200,000 acres of company-owned land in central Florida, and mines potash from five mines in North America. It has an annual capacity of 10.4m tonnes. Mosaic is the world’s largest producer of phosphate with a capacity of 11m tonnes. It was formed by a merger between IMC Global and Cargill in 2004. Mosaic split from Cargill three years ago and bought CF Industries’ phosphate business in 2014.

PotashCorp

Canadian-based PotashCorp is another large fertilizer company. It sold 17.6 million tonnes last year with sales of $7.3bn.

The company owns 14% of Israel Chemicals Ltd (ICL), 28% of Arab Potash Company (APC), 32% of Sociedad Quimica y Minera (SQM) in Chile and 22% of Sinofert Holdings in China. These companies also feature in the world’s 10 largest fertilizer companies. PotashCorp is responsible for 20% of global potash capacity.

CF Industries

CF Industries, the nitrogen producer, sold 14.8 million tonnes in 2013 with sales of $5.5bn. CF was founded by a group agricultural co-ops in 1946. In 2010, it acquired Terra Industries, solidifying its position as the largest nitrogen manufacturer in North America.

CF owns 50% of Keytrade, the Swiss fertilizer trader, as well as 50/50 JV (GrowHow) with Yara in the UK. CF completed the sale of its phosphate business to the Mosaic company for $1.4bn last month.

Eurochem

The Russian newcomer, Eurochem, is only 11 years old and has risen through the rankings into the top 10 with sales of $5.6bn on volumes of 10.6 million tonnes. In 2012, it acquired BASF fertilizer assets in Antwerp, Belgium and K+S nitrogen. This is a trend that may continue, with nitrogen producers from Russia, Ukraine and the Middle East taking advantage of the high fertilizer prices, and relatively low gas costs.