FloridaTrend.com, the Website for Florida Business


One Last Big Push for Phosphate Mining

Mine manager Howie Stoughton
South Fort Meade Mine manager Howie Stoughton and other Mosaic executives take pride in the fact that their business “feeds the world.” In 2006, the company employed about 3,300 Floridians. Critics say the economic benefits may not outweigh the impact the industry has on Florida’s land and water. [Photo: Jeffrey Camp]

In rural west-central Florida, County Line Road defines the border between Polk and Hardee counties. On the south side, the Hardee landscape is typical Florida heartland: Drought-browned pasture stretches mile after mile, dotted by grazing cows, lonely palms and scrub-oak trees. To the north, the view into Polk County is a jarring contrast: Mile after mile of strip-mined earth in shades of gray, with not a tree or other living thing on the horizon.

How It Works:
Phosphate Mining 101
See an interactive, animated Flash presentation of how phospate mining works here. Learn about the process, including:
Draglines keep digging
draglines dig around the clock
Draglines work around the clock digging up to 15 acres a month. [Photo: Jeffrey Camp]
Blasting into the matrix
water guns blast the matrix
A pit car gun blasts water into piles of matrix at 300 pounds per square inch. [Photo: Cynthia Barnett]
Pumping sand back in
Sand is pumped back in
Sand is pumped back into the phosphate pit to fill in cuts created by mining. Ecologist Kevin Erwin in Fort Myers is among the scientists who say that the soils left behind “can never behave like native soils.” [Photo: Jeffrey Camp]
That moonscape to the north is the South Fort Meade Mine, a phosphate operation owned by the most powerful company that most Floridians have never heard of: Minnesota-based Mosaic Co. The $6-billion fertilizer company is one of only three phosphate firms left in Florida from the 100 that operated during the industry’s heyday in the early 20th century. Formed in 2004 by a merger of Cargill Crop Nutrition and IMC Global (Cargill remains 65% owner), it controls more than 300,000 acres of the state.

Mosaic is the biggest phosphate supplier in the world, and the soaring demand for fertilizer has sent its sales and profits skyrocketing. Mosaic’s share price jumped 345% last year, making it the fastest-rising U.S. large-cap stock.

Florida’s sandy soils are key to that success. The company gets 100% of its phosphate from the state — nearly 10 million tons a year. That amounts to more than half the phosphate sold in the U.S. and 16% of the global market, more than double any competitor’s share.

But the industry is entering its endgame in Florida. After more than a century of mining, Florida’s phosphate deposits are running out. Almost all the remaining mineable reserves in the state are found to the south and west of County Line Road. As the industry’s biggest power player, Mosaic is leading a drive to push mining farther into southwest Florida. But, urbanization and environmental concerns mean mining isn’t as easy as it was when phosphate was a top-three Florida industry that expanded pretty much as it pleased.

For the industry, the question is whether the end of mining comes sooner or later. “Florida is out of business in terms of phosphate by 2040,” says G. Michael Lloyd Jr., research director of the Florida Institute of Phosphate Research. “Mosaic is the final big player. If Mosaic can’t get permission to mine southwest Florida, it will be over sooner.”

For residents of southwest Florida, there’s a second big question: If mining proceeds, will Mosaic do it better than predecessors who scarred Florida’s landscape?

Mother lode

All animal and plant cells require phosphate, which forms the backbone of DNA and stores energy from food and sunlight. Adding phosphate to soil hikes crop and pasture yields in fields sapped by farming. But getting enough to make fertilizer in bulk requires removing it from underground.

Phosphate deposits are concentrated in the United States, China, Morocco and Russia. Historically, Florida has been the industry’s mother lode. A matrix of sand, clay and phosphate rock lies just 15 to 50 feet below ground, most in the so-called Bone Valley region of central Florida. Florida’s railroads and ports helped make the state a key exporter.

Mosaic dragline
A Mosaic dragline scours the earth for phosphate as cows graze on a clay settling area. The company posted record third-quarter results last month, with profit surging 12-fold to $520.8 million and sales jumping 68% to $2.1 billion. [Photo: László Bencze/Mosaic]

Starting in the late 1880s, miners began working southward through the heart of Bone Valley. As they dug around Lakeland, Mulberry, Bartow and Plant City, mining became the third-largest industry in the state, behind only tourism and agriculture, for much of the 20th century.

Over time, increasingly efficient production began to deplete central Florida’s reserves. In 1900, it took miners a year to excavate a 15-acre site with picks and shovels. A century later, enormous draglines, working 24 hours a day, seven days a week, can dig up 15 acres a month.

Mosaic and CF Industry Holdings, a Chicago-based fertilizer company, operate the remaining pits in central Florida and want to continue the industry’s traditional progression southward. If Mosaic lands state and federal permits currently under review, the company will expand the South Fort Meade Mine by 10,880 acres, across County Line Road. It also will begin mining a tract called Altman in Manatee County and another in Hardee called Ona.

The expansion, however, puts mining into conflict with other economic forces. Phosphate’s economic clout has diminished as its share of the state’s GDP has given way to 21st century powerhouses like real estate, construction and service industries. Meanwhile, the growing, urbanized population of southwest Florida asks whether the economic contributions of phosphate are worth its environmental impacts. Confronted with the specter of strip mining, newer residents tend to view it as unsustainable in a fragile place like Florida.

Many company executives are taken aback by what they see as underappreciation of the industry’s value. The South Fort Meade Mine’s manager, Howie Stoughton, is a Canadian whose hometown in the heart of potash-mining country has more drivable miles below ground than above. Stoughton says he was astonished to find that even industrial leaders from the Midwest who’ve retired to Florida “say yes they understand the need for this industry — just not here.”

Opposition to Mosaic’s southwest Florida plans is strongest in counties where no mining will occur: Charlotte, Lee and Sarasota. The three counties, along with the Peace River Manasota Regional Water Authority, have spent close to $15 million in taxpayer money on legal battles that began against Mosaic’s predecessors. Through dozens of challenges, court hearings, rulings and appeals, the counties and water authority have disputed the company’s claims that it can restore mined land [“Like New?” page 90]. And they argue that mining will hurt the quality and quantity of water in the Peace River.

“The Peace River is the No. 1 water supply for the people of southwest Florida and the No. 1 water supply for Charlotte Harbor, which provides a $4.5-billion economic impact to the regional economy,” says Tampa lawyer Ed de la Parte. “That is a bigger economic impact than the phosphate industry itself has on the state of Florida.”

Gasparilla Art Festival
[DEP Map]

Mosaic dragline
“The Peace River is the No. 1 water supply for the people of southwest Florida and the No. 1 water supply for Charlotte Harbor, which provides a $4.5-billion economic impact to the regional economy,” says Tampa lawyer Ed de la Parte. “That is a bigger economic impact than the phosphate industry itself has on the state of Florida.” [Photo: Jason Smith]

For years, attempts by the counties and Mosaic to work out settlement agreements went nowhere. In spring 2007, Mosaic tried again, approaching local governments with what the company called a compromise: The company would accept stricter regulations and broader oversight, would promise not to mine in the Peace or Myakka river flood plains, and would offer land for a major drinking-water reservoir for the region. In exchange for a dispute resolution process, opponents would have to drop current and future legal challenges, as well as comments to permitting agencies.

As it negotiated, Mosaic launched a mammoth PR strategy. As it had elsewhere, it hired goodwill ambassadors who live in local communities. The company also blitzed local TV stations with ads extolling the value of phosphate to the nation’s farmers. It engaged in some less savory tactics as well, such as trying to get Charlotte County to ditch de la Parte, the lawyer representing the county against the industry.

Mosaic’s everything-is-going-to-be-fine message became so ubiquitous that some opponents nicknamed the company “The Matrix,” a double entendre on the geologic layer containing phosphate rock and the science fiction movie in which humans live in a virtual-reality world controlled by a computer.

Among other complaints, Charlotte County Commissioner Adam Cummings says the agreement “amounts to a 35-year gag order on Charlotte County. It strips of us our right to have our concerns addressed by permitting agencies. It strips us of our right to be compensated for any damage that may occur as a result of existing mines. It even strips us of our right to free speech.”

A majority of his colleagues disagreed late last year when they voted to accept the settlement, believing it will bring the county more than it could win through litigation. After taking on the lion’s share — some $12 million — of the area’s legal challenges over the years, commissioners also said the county could no longer afford to foot legal bills for the entire region.

While Mosaic officials call the millions spent a waste, even some who support the industry say the legal challenges will produce a much smaller mining footprint and increased environmental protections. One challenge led directly to DEP cracking down on mining streams, another to much higher requirements for financial security; miners have to post bonds equal to 110% of the value of wetlands they have to restore.

Mosaic still must convince Lee and Sarasota counties and the water authority to sign on to the agreement. At the moment, that appears unlikely: Negotiations have come to a standstill, and many officials up for re-election wouldn’t mind if things stay that way until after November. Sarasota County Commission Chairwoman Shannon Staub, a popular Republican with a green reputation, is one of the few willing to express support for the compromise even as she defends her seat.

“Mosaic knows that I’m not their biggest fan, but I’m a realist,” Staub says. “You can get further talking and negotiating than you can with lawsuits. An administrative judge would have never made them donate all the conservation land they have around the creeks and wetlands, would never tell them to give up land for a reservoir.”

Closing moves

Steve Seibert is a former secretary of the state Department of Community Affairs who serves as executive director of Florida’s Century Commission, which was created to advise the governor and Legislature on how the state can achieve a sustainable future. He is also Mosaic’s only Florida resident board member, a position he says he accepted “because I thought I could help this company be thoughtful about its impact on Florida.”

Steve Seibert
Steve Seibert [Photo: Ray Stanyard]
Seibert says the company is just beginning to think about a future beyond phosphate, but his presence on the board is just one indicator that the company is thinking about what it will do with its Florida land when phosphate is mined out. In addition to owning 250,000 acres outright, Mosaic holds mineral rights to another 80,000 acres and options including 30,000 acres on an airpark in Hardee County.

In Tallahassee, Mosaic employs Mark Kaplan, chief of staff under former Gov. Jeb Bush, as its vice president in charge of government affairs. “We have the luxury of being able to take the long view — to imagine what our part of Florida will be like in 2040,” Kaplan says. “As a large landowner and employer, we want to make sure there are vibrant communities left where we’ve mined.”

For now, the company is making so much money in phosphate that any talk of development is on hold. World phosphate stocks are low, while the rate of growth in demand has doubled every year for the past three years, according to the International Fertilizer Association. Dammonium phosphate (the most common fertilizer manufactured in Florida) has sold for as much as $1,000 a metric ton, up from $255 at the start of 2007.

Still, observers say a downturn is unavoidable. The industry’s fortunes have soared and plummeted like a roller coaster for a century. The last major shakeout, which began in 1999 and lasted through 2006, led to the creation of Mosaic and saw seven large-scale phosphate plants close in the United States, six of them in Florida. Mosaic itself shuttered two Florida plants, Green Bay and South Pierce, in 2006 as China transitioned from the largest importer to the second-largest exporter of processed phosphate. Chinese competition remains, and Morocco and other players are ramping up production. A large Saudi Arabian plant is coming online, as are other operations around the globe.

“Supply will increase, and at some point the farmer is not going to be able to continue to pay these prices,” says Paul Clifford, executive director at the phosphate research institute. “I don’t think anyone has repealed the law of supply and demand.”

Mosaic’s opponents aren’t likely to stop phosphate mining in Florida. Realistically, the challenge for them and for the company appears to be to ensure that the company delivers on all its promises even through the inevitable down cycle — to protect water quality and quantity, to restore mined land and to avoid the sorts of ecological disasters the industry has caused in the past. In 2001, for example, Mulberry Phosphates filed for bankruptcy and abandoned its Piney Point and Mulberry plants and gypstacks. DEP was forced to take over maintenance and cleanup at a cost of nearly $200 million. The agency’s efforts to keep the estimated 1.2 billion gallons of acidic wastewater at Piney Point from contaminating Tampa Bay depleted most of the state trust fund that had been established to reclaim phosphate lands mined prior to 1975.

Mosaic has no plans to build more fertilizer plants in Florida, and moreover, “Mosaic’s legacy is important to all of us,” says the company’s senior vice president of phosphate operations, Steven L. Pinney, a former Cargill vice president in Florida who is now a senior vice president of phosphate operations based in Minnesota.

“We’re in this for the long term,” Pinney says. “Walking away from our responsibilities is unacceptable.”

The Miners
And Then There Were Three

Once, more than 100 companies were involved in mining phosphate in Florida. Today, only three miners remain, and none is based in the state. Thanks to demand for fertilizer for corn crops for ethanol and rising world demand for food, all three companies are enjoying the highest earnings in their histories:

  • Mosaic (NYSE-MOS)
    Headquarters — Minneapolis
    2007 revenue — $5.8 billion
  • CF Industries (NYSE-CF)
    Headquarters — Chicago
    2007 revenue — $2.8 billion (41% over 2006)
  • Potash Corp. (NYSE-POT)
    (Parent to PCS Phosphate, which mines in north Florida)
    Headquarters — Saskatchewan, Canada
    2007 revenue — $5.2 billion