The world's population is growing at a rate of 200,000 people per day, according to The World Bank. The population increase means more crops are needed to feed the growing masses. That's a challenge with the availability of arable land decreasing. But it's also an opportunity for fertilizer producers that are benefiting from more demand for higher crop yields.
The Mosaic Co. is among the top crop-nutrient producers realizing significant gains from rising global food demands and the expansion of biofuel production. The Plymouth, Minn., company's most recent quarterly earnings reached a record $542.1 million, more than double 2010 third-quarter profits.
Mosaic's primary products are phosphate fertilizers and potash. The company expects global phosphate-fertilizer demand to grow 3% annually and potash at a rate of 4% a year, says James "Joc" O'Rourke, Mosaic's executive vice president of operations. But demand alone can't account for all of the company's success.
Mosaic has undertaken several strategic initiatives that have improved operational efficiencies and prepared it for future growth.
The company is the largest finished phosphate producer in the world, representing approximately 15% of world's phosphate fertilizer supply, O'Rourke says. Its market strength is due, in part, to the alignment of its supply chain. The company has three phosphate refineries in central Florida and one in Louisiana.
| The Mosaic Co.'s Esterhazy, Saskatchewan, potash mine pictured above is undergoing an expansion to add 1.1 million metric tons of new annual capacity, bringing Esterhazy's total annual capacity to approximately 5.3 million tons. The company will invest $5 billion over the next nine years in potash expansion projects. Photo: Mosaic Co. |
The company is looking to extract more value out of its phosphates business through an "operational excellence" initiative that began about two years ago. The company started by examining its bidding processes and renegotiating contracts, which helped cut $10 million out of its process-chemicals costs, O'Rourke says.
Mosaic's next target was energy usage. The company made a pledge that by 2015 its Florida operations will be power neutral. Mosaic plans to meet its goal by using waste heat from its industrial processes at two Florida plants to produce electricity for a nearby mining operation. So far, the process, known as cogeneration, has already saved the company $14 million to $20 million a year in energy costs, O'Rourke says.
| James "Joc" O'Rourke: Mosaic expects global phosphate fertilizer demand to grow 3% annually and potash at a rate of 4% a year. |
In response to the rising demand, Mosaic has set a goal to increase potash production to 16.8 million tons annually from 10.4 million tons per year, O'Rourke says. To get there, the company will make a capital investment of $5 billion in the next nine years to increase production by 5 million tons through new construction and expansion. Another 1.3 million tons of capacity could be in Mosaic's hands pending a legal battle over a tolling agreement with Canada's Potash Corp.
If population trends are any indicator, further expansion efforts could be on the horizon for Mosaic.