Fields of action from challenges specific to K+S

Availability of raw materials

After the normalisation of the demand for fertilizers in 2010, we again recorded an increasing demand in 2011. Correspondingly, with significantly declining stocks, the utilisation of capacity of most potash producers reached a relatively high level. Over the medium term, we expect a growth in demand for potassium and magnesium of 3% to 5% per year. We want to expand our capacities in order to secure our raw materials base. In 2011, we therefore acquired the Canadian company Potash One and will set up a local potash production based on solution mining.

Appropriate framework conditions are needed in order to be able to mine and process raw materials from German deposits in the future too. The mining of raw materials should be in balanced harmony with other uses of the land and with the requirements of nature conservation and environmental protection. In Germany, however, we are increasingly seeing the access to deposits impeded or blocked by the establishment of protected areas and parallel planning for other uses, because nature conservation in particular is granted priority over the extraction of raw materials without the relevant benefits being weighed up sufficiently.

Water and groundwater protection

In the Potash and Magnesium Products business segment, liquid residues (saline waste water) arise from both current production and through rainfall on the tailings piles. On the basis of existing permits, the residues are introduced into rivers and injected into underground layers of rock (dolomite layer).

In May 2009, we presented our overall strategy for reducing effects on the environment. This demonstrates how the saline waste water volume can be halved and the current method of injecting saline waste water terminated in Hesse by 2015.

On the basis of the overall strategy, we presented our Integrated Package of Measures (IPM) in October 2009. It describes in detail the planned implementation of the individual measures for the protection of groundwater and water as well as the examination of further measures. We agreed the IPM with the federal states of Hesse and Thuringia in order to obtain the required planning certainty for the investments related to it. The voting record was signed in June 2011.

With the completion of the first facilities, the currently occurring saline waste water should be further reduced and gradually halved to 7 million m³ a year by the end of 2015. This will then also make it possible for both the chloride threshold and the hardness value – a biologically particularly relevant variable – to be reduced by about a third each. The prerequisite for achieving these objectives is that there will be after 2015 a balanced distribution between discharge and injection into the underground.

In December 2010, K+S decided to draw up application documents for two remote means of disposal, i.e. pipelines to the Oberweser and to the North Sea. This is being done in order to demonstrate forward-looking due diligence and to maintain the options offered to us: we know that our concept of close-to-site disposal is subject to criticism in some circles and long-term approvals cannot be regarded as certain.

In accordance with the agreements laid down in the voting record on the Integrated Package of Measures (IPM), we sent the first project description with the title “Pipeline facility for the supra-regional disposal of saline water of the Hesse-Thuringia potash district of K+S KALI GmbH” to the federal states of Hesse and Thuringia on 30 November 2011. At present, the responsible authorities are checking on the basis of this project description what approval procedures have to be carried out and what planning and application documents have to be submitted.

However, a decision about the construction of a remote pipeline can be made at the earliest when the test criteria for pipelines are complied with, which are defined by the federal states of Hesse and Thuringia and accepted by the Round Table. So far, this is not the case.

Agricultural prices

Above all our fertilizers can be subject to considerable fluctuations in demand and price. External influences, whose occurrence or non-occurrence we cannot normally influence, can strongly influence the demand for our products in the relevant markets and/or result in pressure on price levels. These factors include, for example, global or regional swings in the economic cycle, sliding global prices of important agricultural products, the appearance of new suppliers, a concentration on the demand side as well as deliberate buying restraint on the part of our customers. Such negative factors were also the reasons for the sharp drop in demand for fertilizers in 2009 and the corresponding deterioration in prices for fertilizers. However, as global trends are supporting the demand for fertilizers, we see very positive possibilities for development over the long term.

Reduction in land available for cultivation

The land available for cultivation is continuing to decline everywhere in the world, partly due to urbanisation, erosion and the increasing salt content of the soil. In 1970, 0.38 hectares of agricultural land were available per capita. In 2050, this will probably only be 0.18 hectares. In many parts of the world there are no more notable suitable reserves of land. What remains as a realistic option is to increase productivity on existing agricultural land through advanced cultivation methods, to apply mineral fertilizers in a bal-anced way and to use resistant plants in order to serve the increasing demand for food.
Climate change