Industrial Minerals - Economic Factors in the Western Phosphate Industry

BETWEEN 1945 and 1948 the author made studies of the western phosphate industry and its potentialities. These included an appraisal of the opportunities for western development of the industry, studies of production costs, of market potentials, of transportation economics, and of industry location. This paper will be directed toward pointing up the factors which have an important bearing on the establishment of fertilizer plants in the western area. Industry Location Factors: There are, of course, an infinite number of possible organizational setups which might require consideration. However, the phosphate industry is simple enough so that studies of the most probable alternatives can be made conveniently. The salient factors which require special consideration in such a study are: (I) the location of the raw materials, (2) the location, size, and character of the present and potential markets, (3) the location of energy sources and materials required for fertilizer processing, (4) the location and capacity of present manufacturing facilities, (5) the cost of assembling the materials and energy needed in manufacturing, and (6) the cost of distributing the manufactured product. Raw Material Supplies: Rock phosphate is the raw material for the manufacturing of phosphate fertilizer. In the United States the important known deposits of this material are located in three general areas (fig. 1). The western deposits, comprising about 60 pct of the nation's supply, are in the four-state area—Idaho, Wyoming, Utah, and Montana. The Florida deposits comprise roughly 38 pct of the national supply. The Tennessee deposits, comprising about 2 pct of the national supply, have been the most important source until recent years. The western deposits, which are virtually undeveloped, have not been used to any extent to meet the nation's need for phosphate rock and phosphate fertilizer. Fertilizer Markets: The large national markets for fertilizer are in the midwestern and eastern United States (fig. 2). The principal far-western markets are along the Pacific Coast, especially in California. Until recent years the western markets have been extremely limited, whereas the markets in the eastern United States have long been established and manufacturing facilities have been provided to meet these needs (fig. 3). In recent years the western markets have expanded very rapidly, continuing to grow throughout the war years and postwar period at a similar rate. The question always arises as to whether this is a temporary war-swollen market which will shrink back to its original size as soon as the present agricultural price levels drop. In order to answer this question consideration must be given to the character of the market (fig. 4). I have considered seventeen western and midwestern states in the western market area where transportation costs from the western deposits are equal to or lower than those from Florida. They include all states west of a line drawn through Chicago, Kansas City and the western boundary of New Mexico. In the mewar period this was a small market totaling only 37,000 tons of P,O, annually. The 1946 total for this same area was approximately 200,000 tons. Considerably more fertilizer would have been used in 1946 had adequate supplies been available. Estimates of future markets are difficult to make, but we do have some indices that are useful. The