Fertilizer as Strategic Assets: Canadian Bid for Israel Potash Producer Crumbles

Canadian Potash Corporation of Saskatchewan’s planned takeover of Israel Chemicals, a large producer of Potash has run into massive opposition.

Israel’s finance minister Lapid and trade unions oppose the deal vigorously as they fear loss of jobs royalties and a strategic asset.

Potash Corp itself was target of protectionist sentiment in 2010 when a bid by Australian BHP Billiton  and a possible counter bid by Chinese Sinochem led to vigorous opposition in Canada that derailed the deal.

In a world of high food prices fertilizers are increasingly perceived as strategic assets as I argue in the last chapter of Oil for Food. Asia in particular has a potash shortage.

The Middle East’s position in global phosphate reserves is more dominant than in the case of oil where it holds 60 percent of conventional reserves. Morocco alone holds over three quarters of global reserves after the recent revisions by the International Fertilizer Development Center and the US Geological Survey.

Iraq has another 9 percent, albeit its reserves are undeveloped. Syria, Jordan, Tunisia are also substantial producers as will be Saudi Arabia once its Al-Jalamid project is fully operational.

As reserves in the two largest producers worldwide, China and the US deplete, the importance of the Middle East in global phosphate markets will grow and therefore their importance for global food security.

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