Fertiliser Cost Curves Explained

Three Curves, Not One

Each fertiliser nutrient has its own cost curve, which ranks producers from cheapest to dearest by the cost of a tonne, and a different input sets each one. Nitrogen’s is set by gas: plants on cheap US Henry Hub gas sit at the low end, plants paying European or imported gas prices at the high end. Phosphate’s is set by rock, sulphur and ammonia, and by whether the producer mines its own rock. Potash’s is set by ore grade, mine type, royalties and the freight to Brazil, the largest import market. A ranking that mixes the three means nothing.

FY2025 Disclosed Unit Costs

No two producers file the same cost measure, so the chart shows filed figures, not a cost curve. Nutrien reports a controllable cash cost of product manufactured (COPM), the plant costs its managers control. Mosaic reports a cash cost. Intrepid Potash reports cost of goods sold (COGS) per short ton of 2,000 lb (0.907 metric tonnes), converted here to metric tonnes.

Nutrien’s ammonia figure leaves out gas, the largest cost of making ammonia, so it says little about where Nutrien sits on the nitrogen curve.

The Nitrogen Curve: Gas Access

CF and Yara file no cash cost per tonne, so the nitrogen curve is read through what each producer pays for its gas, in dollars per MMBtu (million British thermal units, the unit gas is priced in).

A tonne of ammonia takes about 36 MMBtu of gas, the figure in Yara’s Fertilizer Industry Handbook. At that rate CF’s gas cost $119 a tonne in FY2025 and Yara Europe’s $475, a gap of $356/t. Both sell into one world market, so at the same ammonia price the whole gap shows up in margin. The gas and nitrogen guide builds the rest of the cost.

The Phosphate Curve: Rock Integration

Owning the rock and making some of its own ammonia cushions a phosphate producer against input prices without removing them. DAP (diammonium phosphate), the benchmark phosphate fertiliser, is made by treating phosphate rock with sulphur and ammonia. Mosaic’s FY2025 filings give the cost of each input:

Each input is priced per tonne of itself. Per tonne of DAP, Mosaic’s 10-K gives 1.6-1.7 t of rock, about 0.40 long tons of sulphur and about 0.23 t of ammonia. At 1.65 t of rock and the average 2025 sulphur cost of $236, that is about $132 of rock, $94 of sulphur and $108 of ammonia, plus $125 of conversion: $459 a tonne before freight and overheads, against the $670 price.

Mosaic makes part of its ammonia at its own Faustina plant and buys the rest. Its gas exposure comes through that ammonia and through the fuel burnt at its potash solution mine, which dissolves potash underground and pumps it to the surface.

The Potash Curve: Ore and Freight

A potash price and a potash cost compare only when both are measured at the same place. The benchmark is granular MOP (muriate of potash, the standard potash product) CFR Brazil, meaning landed at a Brazilian port with the sea freight paid, which averaged $347.5/t in 2025 (World Bank). Mosaic realised $255/t FOB mine, at the mine before freight. The $92/t between the World Bank’s figure and Mosaic’s is mostly freight and handling to Brazil, with contract timing and customer mix inside it too.

ICL files no potash cost. Intrepid’s price less its COGS is not a margin. The price counts potash sales only, while the COGS spreads the whole segment’s costs, including the salt and brines it sells on the side, over potash tons alone. Its filed potash segment gross margin was $18.2M, or $63 a short ton sold.

The Excel model that comes with the primer keeps price and cost on one basis. Its fictional potash producer sells at a long-run $340/t CFR Brazil, so its cost is carried to Brazil too: mine cash cost $75/t, royalties and resource taxes $35/t and freight $90/t, $200/t in all, for a margin of $140/t. Set the $75/t mine cost alone against the Brazil price and the margin reads $265/t, nearly double, because the freight, royalties and taxes all count as profit.

What Each Cost Leaves Out

Most errors in fertiliser cost work come from setting side by side two costs that leave out different things. Mosaic’s cash costs leave out depreciation, and each segment footnote lists the rest. Intrepid’s COGS includes depreciation but leaves out freight and warehousing, which it reports separately.

Nutrien publishes cost curves in its investor materials and CF publishes nitrogen cost-curve charts. Where a producer files no cost, industry-wide curves from CRU, a price reporting agency, fill the gap, but they do not place a named company.

Linking Curves to Valuation

A cost-curve position sets how wide a producer’s margin is at a given price. Earnings still need rebuilding at a normal price. At the same urea price, a plant on $3/MMBtu gas earns a wider margin than a European plant on $13/MMBtu. The mid-cycle earnings guide does that rebuild.