Fertilizer industry prospects
As part of the rejection of BHP’s acquisition proposal, Potash Corp (POT) released an interesting report about the fertilizer industry and its prospects. On the question of why a mining company could be interested in the fertilizer industry, it is worth remembering that this business is segmented in the three primary crop nutrients (nitrogen, phosphate and potash) and potash in particular is mined. Potash Corp controls 22% of the worldwide potash production capacity.
As side notes, Potash Corp is one of Mohnish Pabrai largest holdings and is interesting to see SQM, one of my first investments, as part of the melodrama. SQM is one of several minority participations that, according to Potash Corp, BHP’s offer is not valuing at their true worth.
The key phrase in the presentation?
Industry characterized by substantial barriers to entry, few producers and no known product substitutes