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July 2013
INSIDE Benefits — but not in cash — from Chatham phosphate Sustainable Page 8
innovation – impeccable taste
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Cadmium study returns clean bill of health Page 26
Kia’s dynamic duo
by Hugh de Lacy New Zealand acquiring its own long-term supply of rock phosphate just off the Canterbury coast will provide huge advantages to the country’s agricultural industries, but about the last place farmers can expect to feel them will be in their wallets. Nelson-based Chatham Rock Phosphate (CRP) expects to have its pioneering seabed mining operation on the Chatham Rise producing 1.5 million tonnes a year of the base fertiliser some time in 2015. That’s a big chunk of New Zealand’s current annual requirement of a little over two million tonnes, but Kevin Geddes, the executive director of the Fertiliser Quality Council, said “it would be a very brave person that would predict a drop in (local fertiliser) prices” as a result. Geddes said the price of rock phosphate in New Zealand was governed by three main factors, of which the first, “and by far the biggest, is the tyranny of distance.
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“We’re at the bottom end of the world and we’re not big users on a global scale, so distance is our problem,” he said. The second factor was the increasing number of countries with rock phosphate resources defining them as strategic, and limiting their exports. “For example, we were importing large volumes from China, and it was good
rock, low in cadmium and high in P [phosphorous], but then China determined that phosphate rock was a strategic resource to their agricultural industries so they would only sell some made-up singlesuper, which of course made it much more expensive for New Zealand farmers.” The United State had done much the same, declaring its dark California phosphate rock, which made excellent RPR and superphosphate, a strategic resource and ceasing exports. Presently New Zealand drew rock from Morocco and Tunisia, in one of the most turbulent parts of the world, and more recently from South Africa. Morocco held 40 billion of the world’s known supplies of 50 billion tonnes of phosphate rock, and many countries had resources of varying quality but current global consumption rates were sustainable for millennia, Geddes said. “There’s no shortage.” The third factor impacting on phosphate rock prices was their cadmium levels. “Cadmium is rising to be a (food safety) issue — not because it’s really an issue but because in the public mind anything that is considered to be a contaminant is a no-no.” New Zealand operates a voluntary code that allows no more than 280mg of
cadmium to be present in every kilogramme of superphosphate sold here, and presently most is at about half that level. The rock phosphate harvested from 400 metres below the surface of the Pacific Ocean 400km off the Canterbury Coast is particularly low in cadmium, but of a lower phosphorous content than Moroccan rock. It will be available either for blending with other rocks and fertiliser additives, or for direct application to pastures, with the company claiming lower run-off levels than other phosphate fertilisers. Speaking to Canterbury Farming on the day CRP filed its historic marine consent application with the Environmental Protection Agency this month, managing director Chris Castle confirmed the new source of phosphate rock would have no effect on prices paid by New Zealand farmers.
“We’re in business to look after our shareholders who have put $22 million into this project so far, so we will be selling at the market price,” Castle said. “Most rock phosphate comes from a part of the world that’s pretty unstable at the moment, so what we’re offering is a rock which is sourced locally, is owned by a New Zealand company, has more security and continuity of supply, is easier to handle and has been tested in field trials,” Castle said. The New Zealand Institute of Economic Research has measured the positive impact of CRP on the New Zealand economy at $1.3 billion, from import substitution, exports and increased economic activity. On an annualised basis CRP will inject $180m a year into the New Zealand economy, of which $115m will comprise benefits to non-stockholders.
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The CRP licence area is estimated to contain 100 million tonnes of rock phosphate, and Castle said it will be exported to no fewer than eight countries, as well as being marketed locally. The actual mining will be carried out by CRP’s 20% Dutch owner, Royal Boscalis, which has a market capitalisation of $3.4 billion. Prices for rock phosphate have fluctuated wildly over the past few years, soaring to $US500/t in 2008 before crashing to $90/t three years later. It’s presently trading at around $US250/t. CRP hopes to gain its marine consent, the last step before gearing up for production, in January of next year, and has launched a prospectus seeking $10m to bring the project onstream. The Edison Investment research company has valued CRP shares at $2 each, and they have lately been trading at around 35c.