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Growing Food Demand To Drive Demand For Potash

Global population growth and improved living standards are expected to increase global food demand, which will in turn increase demand for potash, which is mined and used to make fertilisers.

"Like a lot of other commodities, the growth story is Asia [where there is] very strong demand [but' relatively low output," Potash West (ASX: PWN) managing director Patrick McManus told Media Portal.

The middle class in Asia alone is forecast to grow from 500 million to three billion consumers over the coming decades.

"You've got urbanisation in major countries like India and China -they're going to build houses and cities on arable land, so the arable land per person is going to decrease from about 0.25 of a hectare now to 0.15 by 2050," McManus added.

"The icing on the cake of the story is that India and China are getting richer, so each person is probably going to want to eat more meat, and meat is about 10 times more demanding of agricultural imports than grains."

He added that Australian food commodity producers should focus their attention on improving agricultural efficiency and that the use of fertiliser was one of the most cost efficient methods of improving agricultural output.

"Most of the world doesn't use it properly, and doesn't use it as much as it should," he said.

McManus said that although only a little potash production was currently occurring in Australia, the country was ideally located to supply high demand areas of Asia.

His sentiments align with recent comments made by billionaire packaging and recycling magnate Anthony Pratt who said Australia's aim to become a "food bowl" for Asia could only happen if agriculture was made a national priority.

"Helping to feed a hungry world is Australia's greatest responsibility and opportunity in the 21st century," he told a global food conference in Melbourne last month.

"Australia already feeds 50 million people each year beyond our own needs, but we can quadruple our exports to feed 200 million people."

A 2012 report by consultancy firm Port Jackson Partners showed that strong agricultural demand combined with growing supply constraints were driving an enormous opportunity for agricultural trade.

The report stated that Australia stood to capture an additional $0.7-1.7 trillion in agricultural export revenue between now and 2050 if it seized the opportunity of the Asia food boom.

The report stated that, to capture these benefits, "targeted and timely actions" would need to be taken.

Potash West has recently identified extensions to its current Dinner Hill mineral resource with early exploration confirming the significant potential of the Dandaragan Trough Project in Western Australia.

Independent geological consultant Continental Resource Management has estimated an exploration target of 1000 million tonnes to 1500 million tonnes of fresh greensand at a grade of between 4% and 4.8% of K2O; 8% and 10% of Al2O3; 12% and 14% Fe2O3 and 2% and 2.4% MgO.

Also included in the 65 square kilometres exploration target is 300-600 million tonnes of phosphate mineralisation at a grade of between 1.5% and 3% P2O5 mineralisation.

Last October it defined a JORC compliant Indicated Resource of 241 Mt at 3.0 % K2O including 120 million tonnes at 4.6% K2O.