Highfield Resources Limited · ASX:HFR
Highfield Resources — Investor Presentation (September 2020)
26 slides from Highfield Resources's investor presentation, September 2020
Slide 1: Potash Market Presentation
Potash Market Presentation September 2020
Slide 2: Potash: What is it?
1. Potash What is it? The name Potash comes from the early production technique where potassium was dissolved from wood ash and boiling the solution in large iron pots, precipitate a solid called pot-ash In the 19th century potash was one of the most important chemicals Name: Potassium manufactured
Slide 3: Potash: Where does it come from?
1.1. Potash Potash Whereisdoes What it used it come for? from? Where does it come from? K in liquid fraction to water Disposal of courses human Rivers • Large potash bearing rock deposits occur in many regions waste across the world, derived from the minerals of ancient seas that dried up millions o
Slide 4: Potash: What is it used for?
1.1. Potash Potash Whereisdoes What it used it come for? from? What is it used for? An adequate supply of potash is key to ensuring healthy, nutritious plant growth and crop yield Effect of potash on crops (kg/ha) • Potassium chloride-based fertilisers are the most common method for applying potassi
Slide 5: What is it used for? NPK fertiliser
1.1.1. Potash Potash Potash What is is Where What itdoes used itfor? it used come for? from? What is it used for? The most common usage for potash is as a blend in NPK fertiliser • Vital for photosynthesis • Aids in structural strength, crop • Significant component of amino quality, seed production
Slide 6: Different sources of potassium
1.1. Potash Potash Whereisdoes What it used it come for? from? Different sources of potassium Annual size of markets KCl / MOP K2SO4 / SOP KNO3 / NOP Polyhalite 67Mt 6Mt 2Mt 0.5Mt • The largest and most • Higher cost means it is • Higher cost to make • Polyhalite is a mineral widely used potassium u
Slide 7: Different types of potash
1.1. Potash Potash Whereisdoes What it used it come for? from? Different types of potash Potassium fertilisers MOP SOP c. 90% of market c. 10% of market Difficult to substitute as MOP contains by far the highest levels of key macro-nutrient Speciality potassium application USA and Brazil consume mos
Slide 8: How is it produced? Brine pumping and solution mining
1.1. Potash Potash Whereisdoes What it used it come for? from? How is it produced? Brine pumping • Potash (and other minerals such as lithium) enriched brines are pumped from within the beds of salt lakes • Solution mining tends to be used for deep deposits (salars) or inland seas like the Dead Sea
Slide 9: How is it produced? Underground mining
1.1. Potash Potash Whereisdoes What it used it come for? from? How is it produced? • Mineralisation accessed via shaft or decline, with access depending on depth and presence of aquifers • Machinery includes short wall, continuous miners and road headers • Conveyors or shaft hoists bring ore to the
Slide 10: Potash market: Global reserves
1.2. Pot Potash market What is it used for? Global reserves 34.6% 46.1% Russia Canada 0.2% 7.9% UK 1.6% Belarus Germany 1.4% 0.2% 0.4% USA Spain 2.2% Israel 0.4% China Jordan 3.1% Brazil 1.4% Chile 0.5% Other • Current recoverable potash deposits is estimated to be around 16 Billion tonnes of K2O •
Slide 11: Production is very concentrated
1.2. Potash Potash market Whereisdoes What it used it come for? from? Production is very concentrated Russia Canada Belarus Germany 18% 20% 31% 5% 5% 11% Israel China 9% ROW Over 90% of global production comes from six key countries which have the ability to control market dynamics Canada acts as th
Slide 12: Most large potash producers are far away from key markets
1.2. Potash Potash market Whereisdoes What it used it come for? from? Most large potash producers are far away from key markets 25 Mt 21 Mt 6 Mt 4 Mt 4 Mt 9 Mt 28 Mt Europe CIS 6 Mt North America 1 Mt 8 Mt Middle East 1 Mt Asia 0 Mt Africa 13 Mt Production (Mt) 0 Mt 1 Mt 2 Mt Demand (Mt) Australia L
Slide 13: Potash demand has been steadily increasing over the last 9 years
1.2. Potash Potash market Whereisdoes What it used it come for? from? Potash demand has been steadily increasing over the last 9 years Compound Annual Growth Rate: 3.19% 80.000 70.000 60.000 50.000 40.000 Mt 30.000 20.000 10.000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 China North America
Slide 14: The future for potash demand looks positive: arable land
1.2. Potash Potash market outlook Whereisdoes What it used it come for? from? The future for potash demand looks positive Arable land (hectar per person) 0,24 0,23 0,22 0,21 0,20 0,19 0,18 0,17 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Source: 2015 The World2016 Bank
Slide 15: The future for potash demand looks positive: population
1.2. Potash Potash market outlook Whereisdoes What it used it come for? from? The future for potash demand looks positive Forecast 2,0 10,0 1,8 9,0 1,6 8,0 1,4 7,0 Billions of tonnes 1,2 6,0 Billion 1,0 5,0 0,8 4,0 0,6 3,0 0,4 2,0 0,2 1,0 0,0 0,0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 199
Slide 16: Potash demand is expected to keep on increasing
1.2. Potash Potash market outlook Whereisdoes What it used it come for? from? Potash demand is expected to keep on increasing Arable land per person has been steadily decreasing, whilst global potash demand has increased 3.19% per annum from 2010 to 2019. With global population continuing to grow, i
Slide 17: The future for potash demand looks positive: crop production
1.2. Potash Potash market outlook Whereisdoes What it used it come for? from? The future for potash demand looks positive 2,0 80 1,8 70 1,6 60 1,4 50 Billions of tonnes 1,2 1,0 40 Mt 0,8 30 0,6 20 0,4 10 0,2 0,0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2
Slide 18: Potash supply outlook: potential capacity additions
1.2. Potash Potash supply outlook Whereisdoes What it used it come for? from? Potential capacity additions 110 100 90 80 Mt 70 60 50 40 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Current Nameplate Capacity (TOTAL) Petrikov Belaruskali Nakhon Ratchasima Thai Kali Co Volgakaliy EuroChem Mu
Slide 19: Producer control is expected to continue
1.2. Potash Potash supply outlook Whereisdoes What it used it come for? from? Producer control is expected to continue With demand increasing and more supply discipline from the large producers, supply-demand fundamentals are expected to be tightly controlled in the future With 9 companies controlli
Slide 20: Crop prices influence potash prices
1.2. Potash Potash price history Whereisdoes What it used it come for? from? Crop prices influence potash prices Global financial crisis July 2013 Uralkali drops 800 out of cartel with BPC 20 2008 food crisis, countries start to ban 18 700 July 2014 Rouble drops crop exports as prices 2011 crop pric
Slide 21: Muga's location is one of its major attributes
1.3. Potash Muga mine and the European market Whereisdoes What it used it come for? from? Muga’s location is one of its major attributes Logistics and distance to market is a key driver to the competitiveness of potash mines Proximity to local premium European market Access to world class infrastruc
Slide 22: Muga's location: European markets accessible
1.3. Potash Muga mine and the European market Whereisdoes What it used it come for? from? Muga’s location is one of its major attributes European markets accessible • The Muga mine will be close to key demand areas of to Muga mine Europe 6.2 Mt Muga Mine MOP trade routes • With extremely competitive
Slide 23: Tight local supply due to mine closures
3. Muga mine and the European market • Tight local supply due to mine closures and high cost local producers have maintained the European price premium • Given the mine’s location, a large part of the regional premium will be captured at the mine 450,00 Market control, mine closures provided Weaknes
Slide 24: Muga is forecast to be one of the highest margin mines globally
1.3. Potash Muga mine and the European market Whereisdoes What it used it come for? from? Muga is forecast to be one of the highest margin mines globally Margin curve forecast for 2024 (real US$) 200 180 160 140 120 MOP US$/t 100 80 60 40 20 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 Highfield
Slide 25: Conclusion
1.4. Potash Conclusion Whereisdoes What it used it come for? from? Global population is growing, demand for food is increasing and arable land is decreasing Increasing the need for higher crop yields and therefore increasing the requirement for fertilisers At the same time current supply is tight du
Slide 26: www.highfieldresources.com
www.highfieldresources.com
Highfield Resources — Investor Presentation (September 2020) on 6ix