Potassium Chloride Supply Chain - Executive Summary

Potassium Chloride

Raw Material

KCI
(solid)

Source of Raw Material:

Naturally occurring mineral

J* Derivative Water Treatment Chemicals:

*

Potassium Hydroxide

iOi % of Total Domestic Consumption
Attributed to Water Sector:

Less than 1%

6b Understanding Chemical Supply Chains

Product Family:

Potassium

CAS No.: 7447-40-7

Shelf Life:

60+ Months

 RISK OF SUPPLY DISRUPTION (Assessed in 2022)

RISK RATING: Low

ie-Low Moderat



RISK DRIVERS

Agricultural use of fertilizer,
trade disputes, and reliance
on a small number of coun-
tries for imports add to risk
for potential supply disrup-
tions. Domestic production
is largely intended for ferti-
lizer, though there is dedi-
cated production of potassi-
um hydroxide as it is widely
used.

RISK PARAMETERS

Criticality: Moderate-High. Essential for the
production of the input for potassium per-
manganate.

Likelihood: Low. No history of supply
disruptions between 2000 and 2022.

Vulnerability: Moderate-High. The U.S. re-
lies heavily on imports to meet domestic
demand. The U.S. is a leading worldwide
consumer of potassium chloride, the majori-
ty of which is used to produce fertilizer.

PRODUCTION PROCESS

Water Treatment Applications

Mining

Potassium Chloride

Water treatment chemical production

Other Applications

Input

End Use

	Fertilizer (85% overall domestic use)

	Chemical manufacturing

	Animal feed

	Deicing

DOMESTIC PRODUCTION AND CONSUMPTION, AND INTERNATIONAL TRADE

Domestic Production Locations (2019):

2, New Mexico and Utah.

International Trade (2019)

Primary Trading Partner (Imports): Canada

Primary Trading Partner (Exports): Mexico

Domestic Consumption (2018):
9,491 M kg

	Domestic Production (490 M kg)

	Imports for Consumption (9,380 M kg)

	Export of Domestic Production (379 M kg)

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Potassium Chloride Supply Chain - Full Profile

Product Description

Potassium chloride (KCI), also known as muriate of potash, is the most common form of potassium-bearing
minerals, which are collectively referred to as potash. Though potassium chloride is not used directly in water
treatment, it serves as an important raw material in the production of other water treatment chemicals.
Potassium chloride is widely used in fertilizer, which is the single largest domestic and international application.
In 2018 the U.S. Department of the Interior listed potash as a critical mineral.

Use in Water Treatment

Potassium chloride is not used directly in water treatment.

Use as a Precursor to Other Water Treatment Chemicals

Potassium chloride is used to manufacture potassium hydroxide. Though not widely used as a raw material,
potassium chloride can be used to manufacture chlorine.

Other Applications

Potassium chloride has a wide range of applications. The leading use of potassium chloride is as a source of
potassium in fertilizer. It is also used for chemical manufacturing, as a source of potassium in animal feed, ice
melting applications, and industrial uses such as aluminum refining (USGS, 2021).

Primary Industrial Consumers

In 2019, approximately 85% of potassium chloride consumed in the U.S. was used in the production of fertilizer.
Worldwide, in excess of 90% of global production is intended for fertilizer production. Approximately 6% of non-
fertilizer potassium chloride is converted to other chemicals, primarily potassium hydroxide. Other applications,
including animal feed, ice melting, and industrial use account for 2% of worldwide use (BHP, 2021; USGS, 2021).

Manufacturing, Transport, & Storage

Manufacturing Process

Potassium chloride is a naturally occurring mineral that is abundant throughout the earth, found in deposits and
extracted from seawater. Potassium chloride may be produced by conventional underground mining, solution-
mining of an underground deposit, or evaporation of brine. The dominant mineral source is sylvite (potassium
chloride in natural mineral form) often mixed with halite (sodium chloride) (USGS, 2019; USGS, 2021).

Conventionally mined potassium chloride requires beneficiation, which often includes crushing, and grinding to
separate out potassium chloride from other material. Further processing includes multiple steps of flotation,
drying, sizing, compacting, and crystallization (DOE, 2013; PotashCorp, 2013). Solution mining relies on injection
of a heated brine into an underground mine to dissolve deposits from the pillars and walls of an established
mine. The brine is pumped into an evaporation pond where the potassium chloride crystals settle to the bottom
and can be collected and processed. Solution mining uses significantly more energy and water than conventional
mining (DOE, 2013; USGS, 2021).

Evaporation of a natural brine requires the brine is placed in an outdoor pond under conditions where
evaporation outpaces precipitation. Crystals can be recovered after sufficient evaporation of water. This process
yields a high purity potassium chloride (DOE, 2013; PotashCorp, 2013).

Product Transport

Many methods are used to transport potassium chloride, however transportation costs can add significantly to

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Potassium Chloride Supply Chain - Full Profile

the price of potassium chloride, as use is widespread throughout the world while production locations are not
(USGS, 2021).

Storage and Shelf Life

Potassium chloride is stable and non-reactive over a wide range of temperatures and is highly soluble in water.
When stored properly, potassium chloride can have a shelf life in excess of 60 months (Chemtrade Logistics,
2018).

Domestic Production & Consumption

Domestic Production

Production data was collected from U.S. Geological Survey (USGS), while trade data was collected from the U.S.
International Trade Commission (USITC) Dataweb, as shown in Table 1. While trade data are specific to
potassium chloride, production data was calculated as a percentage of total potash production.

Table 1. Potassium Chloride Production and Trade Data Sources

Production and Trade Data

Category

Data Source

Identifier

Description

Domestic Production

U.S. Geological Survey

CAS No.: 7447-40-7

Potassium Chloride

Imports and Exports

U.S. International Trade Commission

HS Code: 3104.20

Potassium Chloride

Total U.S. domestic production of potassium chloride was approximately 490 million kilograms (M kg) in 2018.
This estimate is based on total domestic potash production of 1,400 M kg in 2018, of which approximately 35%
is estimated as production of potassium chloride. While potash is produced at two mines in New Mexico and
three facilities in Utah, potassium chloride is produced by Intrepid Potash, Inc. at one facility each in New Mexico
and Utah (USGS, 2019; USGS, 2021).

Domestic Consumption

U.S. consumption of potassium chloride in 2018 is estimated at 9,491 M kg. This estimate includes production of
490 M kg, import of 9,380 M kg, minus export of 379 M kg (USGS, 2020a), as shown in Figure 1.

e Domestic Consumption (2018):

9,491 M kg

	Domestic Production (490 M kg)

	Imports for Consumption (9,380 M kg)

	Export of Domestic Production (379 M kg)

Figure 1. Domestic Production and Consumption of Potassium Chloride in 2018

Trade & Tariffs

Worldwide Trade

Worldwide import and export data for potassium chloride are reported through the World Bank's World

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Potassium Chloride Supply Chain - Full Profile

Integrated Trade Solutions (WITS) software, as a category specific to potassium chloride. In 2018, the U.S.
ranked fourth worldwide in total exports and first in total imports of potassium chloride. In 2018, Canada ranked
first worldwide in total exports (WITS, 2022), as shown in Table 2. Exports from Belarus, one of the most
significant potassium chloride producers, were not reported in 2021.

Table 2. WITS Worldwide Export and Import of Potassium Chloride in 2021

2021 Worldwide Trade
Potassium Chloride (HS Code 3104.20)

Top 5 Worldwide Exporters

Top 5 Worldwide Importers

Canada

21,625 M kg

United States

13,454 M kg

Russian Federation

11,835 M kg

Brazil

12,780 M kg

Germany

3,455 M kg

China

7,673 M kg

United States

3,120 M kg

Indonesia

4,016 M kg

Spain

760 M kg

Malaysia

1,863 M kg

Domestic Imports and Exports

Domestic import and export data are reported by USITC in categories specific to potassium chloride. Figure 2
summarizes imports for consumption1 and domestic exports2 of potassium chloride between 2015 and 2020.
During this period, the overall quantity of imports and exports remained relatively steady, with imports for
consumption significantly outpacing domestic exports. Over this five-year period, Mexico was the primary
recipient of domestic exports while the primary source of imports was Canada (USITC, 2021). One of the largest
potash deposits is found in Saskatchewan, Canada.

It is noteworthy that total exports, as recorded by WITS, are significantly greater than domestic exports as
recorded by USITC. Total exports represent goods produced or modified in the U.S. in addition to exports of
goods of foreign origin that have passed through U.S. customs.

1	Imports for consumption are a subset of general imports, representing the total amount cleared through customs and entering
consumption channels, not anticipated to be reshipped to foreign points, but may include some reexports.

2	Domestic exports are a subset of total exports, representing export of domestic merchandise which are produced or manufactured in
the U.S. and commodities of foreign origin which have been changed in the U.S.

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Potassium Chloride Supply Chain - Full Profile

14,000
12,000
10,000
52 8,000
> 6,000
4,000
2,000

Domestic Trade of Potassium Chloride
HS Code 3104.20











































































































































































































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Q. CL

 *
C LU

2015

N>

2 Imports
cr>

Exports

N>

2 Imports
Exports

NJ

2 Imports
oo

Exports

NJ

2 Imports



Exports

CO

S Imports
o

Exports

I Imports from Canada	 Exports to Mexico

I Imports from Russian Federation  Exports to Canada
Imports from Other Countries	Exports to Other Countries

Figure 2. USITC Domestic Import and Export of Potassium Chloride between 2015 and 2020

Tariffs

Imports of potassium chloride are primarily supplied from Canada. There is no general duty for import of
potassium chloride, however there is an additional 25% duty on imports from China (USITC, 2022), as
summarized in Table 3.

Table 3. 2021 Domestic Tariff Schedule for Potassium Chloride

HS Code

General Duty

Additional Duty - China
(Section 301 Tariff List)

Special Duty

3104.20

None

25%

None

Market History & Risk Evaluation

History of Shortages

Canada, Russia, Belarus, and China accounted for 80% of world potash production in 2019, and global supply
and demand from these select countries have historically dictated price and availability. The U.S., which imports
approximately 17% of worldwide production, relies heavily on Canadian production to meet domestic demand,
and supply is heavily reliant on rail transport from Saskatchewan. Use in fertilizer dominates global and domestic
demand for potassium chloride, and as potassium is a vital nutrient for crop growth, it plays a key role in
determining crop yields. Though historically the price of potassium chloride has fluctuated, there was no
identified history of potassium chloride shortages between 2000 and 2022.

In 2022, the World Bank recognized worldwide potash supply shortages due to challenges in bringing potash
from Belarus and Russia to market, noting a 178% price increase in potash from April 2021 to April 2022 (Baffes
and Koh, 2022).

Risk Evaluation

The complete risk evaluation methodology is described in Understanding Water Treatment Chemical Supply
Chains and the Risk of Disruptions (EPA, 2022). The risk rating is calculated as the product of the following three
risk parameters:

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Potassium Chloride Supply Chain - Full Profile

Risk = Criticality x Likelihood x Vulnerability
Criticality Measure of the importance of a chemical to the water sector

Likelihood Measure of the probability that the chemical will experience a supply disruption in the
future, which is estimated based on past occurrence of supply disruptions

Vulnerability Measure of the market dynamics that make a chemical market more or less resilient to
supply disruptions

The individual parameter rating is based on evaluation of one or more attributes of the chemical or its supply
chain. The ratings and drivers for these three risk parameters are shown below in Table 4.

Table 4. Supply Chain Risk Evaluation for Potassium Chloride

Risk Parameter Ratings and Drivers



1

1

1 Criticality Moderate-High

1 Likelihood Low 1

Vulnerability Moderate-High 1

Potassium chloride is essential to the
water sector as a raw material in the
production of potassium hydroxide,
which is used to manufacture
potassium permanganate.

There have been no notable domestic
potassium chloride supply disruptions
between 2000 and 2022.

The U.S. relies heavily on imports
from Canada, and to a lesser degree
Russia, to meet domestic demand.
The U.S. is a leading worldwide
consumer of potassium chloride, the
majority of which is used to produce
fertilizer.

Risk Rating: Low

.etate-Lw Moderaf

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References

Baffes, J., Koh, W. C., 2022. Fertilizer prices expected to remain higher for longer, World Bank Blogs, May 11,
2022, retrieved from https://blogs.worldbank.org/opendata/fertilizer-prices-expected-remain-higher-
longer

BHP, 2021. Potash Outlook and Fundamentals 101, retrieved from https://www.bhp.com/-
/media/proiect/bhplip/bhp-com-

en/documents/investors/presentations/2021/210617 potashoutlookbriefing.pdf

Chemtrade Logistics, 2018. Potassium Chloride Product Profile, retrieved from
https://www.chemtradelogistics.com/wp-content/uploads/202Q/10/PDS-
Potassium Chloride Product Profile.pdf

EPA, 2022. Understanding Water Treatment Chemical Supply Chains and the Risk of Disruptions, retrieved

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Potassium Chloride Supply Chain - Full Profile

from https://www.epa.gov/waterutilityresponse/risk-disruptions-supplv-water-treatment-chemicals

The Potash Corporation of Saskatchewan (PotashCorp), 2013. The Potash Journey, retrieved from
https://minedocs.com/20/PotashCorp brochure 2012.pdf

U.S. Department of Energy (DOE), 2013. Energy and Environmental Profile of the U.S. Mining Industry,
retrieved from https://www.energy.gov/sites/prod/files/2013/ll/f4/potash soda borate.pdf

U.S. Geological Survey (USGS), 2019. Mineral commodity Summaries for Potash, retrieved from

https://www.usgs.gov/centers/national-minerals-information-center/potash-statistics-and-information

U.S. Geological Survey, 2021. 2018 Minerals Yearbook: Salt, retrieved from https://d9-wret.s3.us-west-
2.amazonaws.com/assets/palladium/production/atoms/files/mybl-2018-potas.pdf

U.S. International Trade Commission (USITC), 2021. USITC DataWeb, retrieved from
https://dataweb.usitc.gov/

U.S. International Trade Commission (USITC), 2022. Harmonized Tariff Schedule (HTS) Search, retrieved from
https://hts.usitc.gov/

World Integrated Trade Solutions (WITS), 2022. Trade Statistics by Product (HS 6-digit), retrieved from
https://wits.worldbank.org/trade/countrv-bvhs6product.aspx?lang=en#void

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