Thinking of buying Potash Corporation? Try water

It is not immediately obvious, but BHP Billiton’s bid for Potash Corporation highlights the opportunity ahead for the water sector. The thinking behind the $39 billion bid is that there is a growing shortage of the mineral at the very moment that agricultural demand is accelerating.

If you are a natural resources company like BHP, and you want to invest to capitalise on the global imperative to increase agricultural yields to meet rising food and energy crop demands, then potassium compounds – the third most popular group of compounds used in fertilisers – looks like a good move. Buying water might be another opportunity – if it wasn’t so endlessly recyclable.

And that is the point. Nitrates, phosphates and potassium compounds are not recycled in the way that water is recycled by nature. They are washed off the fields into the groundwater, or into streams and rivers and out to sea. It means that these minerals are becoming increasingly scarce: my colleague Paul O’Callaghan talks about the possibility of “Peak Phosphorus” – the point at which the amount of phosphorus that can be taken from nature starts to decline. We may already have reached it.

The solution is to invest more in retrieving these nutrients from wastewater. At the moment, wastewater treatment plant operators are primarily concerned with removing nitrates, ammonium and phosphates from the effluent stream. The real opportunity is in technologies such as CASTion’s ammonia recovery process or the struvite crystallisation methods used by Ostara Nutrient Recovery Technologies, and DHV’s Crystallactor process (see our report Water Technology Markets 2010 for details). These recover inorganic nutrients so that they can be reused in agriculture.

The value-from-waste theme in the water sector is going to be one of the fastest growing sectors of the water market over the next decade. Beyond simple water recycling, there are opportunities to retrieve energy, fertilisers, and other valuable salts and minerals from municipal and industrial wastewater, agricultural run-off, and desalination brine reject. GE Water has made this one of its key strategies, and an opportunity which is big enough for GE, is big enough for anyone in the water sector.

When we see this scramble for natural resources driven by the inexorable rise of China and India, it is important to remember that water is not only the most significant natural resource in itself, but also the key to so many others.