Potash: Meaning, Trading, Reserves and Production

What Is Potash?

Potash is the common name for any of several compounds containing potassium, including potassium sulfate (K2SO4), potassium-magnesium sulfate (K2SO4-MgSO4), potassium nitrate (KNO3), potassium carbonate (K₂CO₃), potassium oxide (K₂O), and potassium chloride (KCl).

All these compounds are used primarily in the manufacturing of fertilizer. 

The term potash derives from the Dutch word potaschen, which means "pot ashes". 

Understanding Potash

​​​​​​​Potash may refer to any mined or manufactured salt that contains potassium in a water-soluble form. Potash was historically made by saturating wood ashes in water and then heating the mixture in an iron pot until the liquid evaporated, leaving behind a white residue called potash.

The ash is still used in the manufacture of fertilizers, soap, glass, and ceramics. 

Potassium is the seventh most commonly found element in our planet's crust but it requires refining before use. Potash has been used since about the year 500 A.D. to make materials such as glass and soap. The American potash industry began in the 18th and 19th centuries when settlers cleared forests to plant crops. They burned the excess wood and sold the ashes to create soap or to boil down into potash.

Pearl ash, which is created by burning the substance familiar to bakers as cream of tartar, is similar to potash. The burning process produces potassium carbonate, which is a more refined version of potash. Also known as salts of tartar, pearl ash was historically made by burning and refining potash.

Trading in Potash

Potash contains water-soluble potassium, which helps plants grow. As a fertilizer, this nutrient helps farmers improve the taste, texture, color, yield, and water retention of their crops.

Common crops that rely on potash include corn, rice, wheat, and cotton, among many others. There is no substitute for potash as a fertilizer. The most common types of potash used include:

• Potassium chloride (KCl)
• Potassium sulfate or sulfate of potash (SOP)
• Potassium magnesium sulfate (SOPM)

According to the U.S. Geological Service (USGS), the 2020 estimated value of marketable potash was $430 million. About 85% of it was used as a fertilizer. Most of the imported potash used in the U.S. came from Canada.

Investors can buy potash through trading companies involved in the mining and refining of potash. These companies include Potash Corp. of Saskatchewan (POT), Agrium (AGU), and Mosaic (MOS), all of which trade on the New York Stock Exchange (NYSE). 

Farmers around the globe use potash, and futures are available for potash, listed as potassium chloride.

Potash Reserves and Production

Potash reserves are common in areas that shallow seas in ancient times. As the earth developed and the water receded, the salts, a mixture of potassium chloride (KCl) and sodium chloride (NaCl), were left behind, forming potash. Over time, the earth's changing surface buried most of these reserves deep in the earth's crust.

In its raw form, potash deposits exist around the globe. Together, the countries of Belarus, Canada, China, Germany, Israel, Jordan, and Russia produce 93.9% of the world's potash.

The number one potash-producing region is Eastern Europe. However, Canada has the largest reserves. In the U.S., potash is produced in New Mexico and Utah.

Several methods can be used to produce potash. However, in large-scale production, two methods have dominated: 

• The evaporation method requires the addition of hot water to the potash. The potash dissolves and rises to the surface. The excess water is evaporated, creating a concentrated substance. 
• In dissolution mining, potash-bearing deposits are recovered from deep-well mines. The potash then goes through a grinding process to turn it into powder.