Sunday reading
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How An Unassuming Geologist Cracked The Global Fertilizer Cartel
Michigan is sitting on a motherlode of potash and Ted Pagano is using $1.3 billion in government funds to mine it and grab market share away from Canada and Russia.
The eureka moment came in 2012, when professor emeritus William Harrison of the University of Western Michigan invited Ted Pagano, then a 35-year-old freelance geologist, to his 27,000-square-foot geological repository in Kalamazoo. A rock nerd’s heaven, the warehouse’s heavy-duty shelves feature crates of minerals from across the state. But Pagano was there to see something specific: the 80 pallets of rock cores donated in 2008 by the Mosaic Company, a large ($11.1 billion in 2024 sales) NYSE-listed potash specialist. Cores are standardized cylinders of rock, three feet long and four inches in diameter. These were recovered from some 75 wells drilled back in the early 1980s to depths 8,000 feet beneath Osceola and Mecosta counties, a sparsely populated swath of central Michigan, into a layer of rock rich in minerals deposited by an ocean that evaporated millions of years ago. Those minerals include salt (sodium chloride) and potash (mostly potassium oxide), which farmers prize as a fertilizer. It’s a critical mineral—the U.S. uses 5.3 million tons annually and imports 95% of it, mostly from Canada.
Pagano was excited to see these cores because he hoped they would prove his hunch: that Mosaic had been sitting on a potash motherlode in Michigan far bigger than anyone realized. He suspected that the deposit, if properly developed, could provide 1 million tons of fertilizer per year for American farmers. That would be nearly seven times the volume that Mosaic’s little 150,000-ton-per-year plant in Hersey, Michigan, was producing. Putting up $70,000 of his own money, Pagano had formed Michigan Potash & Salt Company and was already leasing up mineral rights from ranchers and farmers in the area. Even so, Pagano says, “I went to the core lab with skepticism.”
Harrison and Pagano cut open sealed plastic bags to extract rock wrapped in newspapers from 1984. Testing revealed thick deposits of some of the highest-purity potash deposits ever discovered. They were especially excited when they opened the cores from a well called Stein 1-7. It had been drilled miles from the area considered the sweet spot, so Pagano thought the odds were high that these cores would show low concentrations of potash. Instead, they were just as good. This was proof that the actual extent of the Michigan potash deposit was considerably larger than even experts like Harrison had expected. Pagano began leasing like crazy: Soon he had a position covering 15,500 acres (about 24 square miles) of what has proven to be one of the biggest potash deposits in the United States.
I found the entire Forbes article fascinating, especially the story of who Ted Pagno is and how he came to discover this lode and finance its development. Here’s a bit more from the main article on the significance of this find:
To extract the potash, Pagano will use a form of “in-situ,” or solution mining. He’ll drill 8,000-foot-deep wells in pairs. One is the injection well, down which Michigan Potash will send hot water to dissolve potash and salt in place. The second is the production well; the solution travels up that well to the processing plant for separation and drying. The water is reclaimed, heated and sent back down the hole. From the surface the mine will hardly be noticeable and should be eligible for green tax credits. “There’s no hair on this project that we’re ashamed of,” says chief operating officer Aric Glasser.
In all, Forbes estimates that costs should come to about $140 per ton; potash sells for about $350 a ton today. Global giant Mosaic can produce potash for less—about $80 a ton—but Midwestern farmers are still on the hook for another $80 per ton in rail shipping costs from Saskatchewan, 1,200 miles away, plus any tariffs that President Trump might choose to impose (currently 10% on Canadian potash). Agricultural giant ADM has already agreed to buy nearly all of Pagano’s yearly potash production.
Mosaic rejected Pagano’s offers to buy some or all of its remaining Hersey plant and, citing high costs, shut down its potash operation there in 2013. It sold the remaining salt processing operation to Cargill for $55 million. “They thought they didn’t have to worry about competition,” Christofferson says.
Vladimir Putin’s February 2022 invasion of Ukraine changed that thinking. The EU banned the import or even transit of Russian and Belarussian fertilizers. China banned potash exports to conserve supply for its domestic market. Prices soared to $1,200 per ton. To keep a lid on costs, neither President Biden nor Trump has banned or sanctioned imported Russian potash.
Every ton Pagano can supply domestically should make more potash available outside the U.S. in international markets including sub-Saharan Africa, whose farmers desperately need fertilizer. “It takes a crisis to wake people up out of complacency,” Pagano says. And it takes an intrepid contrarian to challenge an oligopoly.