EMMERSON PLC
ture space looks to increase its yield and production by around 70 %, it will both control and protect the potash market . “ For the last hundred years this market has been dominated by a handful of suppliers who have shown themselves to be very disciplined when the price fluctuates . When prices rise , they increase production to bring the price back down ,” he says . “ When you combine this price discipline with the traditionally high barriers to entry – in the form of capex – you can understand why there have been virtually no new entrants to the market in the last five decades . The only way to guarantee entry to this market is through lower capital cost production , which is what Khemisset will bring .”
The traditionally controlled potash market has allowed companies like Emmerson to look at existing and successful potash operations in great detail . In particular , Locke has been able to better understand the structure of the market in order to see whether Emmerson could compete – and indeed whether it should compete with incumbents in the first place . He points to BHP as an example : the company
has tried on three separate occasions to enter the potash market , all of which have proven unsuccessful . “ This is the world ’ s largest mining company and they could not get past those barriers to entry , so you really need to take a different viewpoint ,” he says . “ We spent a lot of time looking at our competitors and those existing operations to analyse the cost structures and what does and doesn ’ t work before embarking on
APRIL 2019