Huge supply shortage of chemical mineral resources.

80% of chemical minerals containing phosphorus, sulfur and potassium are used in manufacturing chemical fertilizers, constitute of major mineral raw materials for the chemical fertilizer manufacturing industry. The phosphorus reserves in China hold the first place worldwide, can satisfy domestic demand the time being and have balance to be exported. 50% of domestic demand for sulfur needs to be imported from abroad. 65% of domestic consumption on potassium depends on import.

Outstanding problems in the development of chemical minerals

(1) The production is more diversified and balance between output and demand relies on small-scale enterprises

There were 834 enterprises engaged in the mining of phosphate, pyrite and potash in 2007. Besides a few large enterprises such as Yunnan Phosphate Chemical Group Co., Ltd., Guizhou Kailin Group, Guizhou Wengfu (Group) Company Limited, Guangdong Yunfu Pyrite Enterprises Group Corporation, Xinqiao Mining Company Limited of Anhui Tong Ling Chemical Industry Group, Qinghai Salt Lake Industry Group and Xinjiang Luobupo Potash Co., Ltd., all the others are small and medium scale enterprises. The total output in small scale enterprises accounts for around 35% of the national total. The fragile supply/demand balance maintained by the output in small scale enterprises has remained unchanged for many years. The development of the chemical mine sector lags far behind the development of chemical fertilizer and chemical sectors.

(2) There is serious waste of resources and the supply shortage of sulfur and potash resources is more and more serious

China has very fewer high-quality rich phosphorus resources. The mining today is focused on rich minerals. Based on a recovery rate of 65% in large and medium mines and 30%-40% in small mines, around 100 million tons of high-quality phosphorus resources are used and around 200 million tons of low-grade minerals are discarded a year. It is therefore imperative to intensify the protection of resources and make use of medium and low-grade minerals.

The output of sulfuric acid in China started to hold the first place worldwide from 2003. There is a supply shortage of pyrite and sulfur in China.

In terms of potash resources, plans for constructing overseas potash bases in surrounding countries such as Thailand and Laos have failed to produce desired results. It is therefore a long-term topic to conduct technical innovation and strengthen resource protection.

(3) The inadequate carrying capacity affects the development

There was still great tension in the transportation of minerals and chemical fertilizers in the southwest and the northwest of China in 2007. Due to the shortage of fuel oils and power, in particular, the transportation of oil products and coal occupy most of the railway carrying capacity and the transportation of phosphate and sulfur is affected.

It is expected that the overall demand status of phosphorus, sulfur and potassium resources in China in 2008 will be as follows. The total amount will be stable with some increase and the production and the demand can hardly he balanced. The price will go up slightly and the economic performance in the sector will be improved. Owing to the use of medium and low-grade minerals the tight supply of phosphorus resources will be eased. The sulfur resources will be in short supply, the price of pyrite will have an increase and the price of sulfur will maintain at a high level. The output of potassium resources will have slight increase and the price will go further up. It is expected that the output of phosphorus ore will be 60.0 million tons, the output of pyrite will be 18.0 million tons and the output of potash fertilizers will be 3.8 million tons in 2008.

By Yuan Junhong, Deputy Secretary-General of China Chemical Mine Association