We recently compiled a list of the 11 Best Potash Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Rio Tinto Group (NYSE:RIO) stands against other best potash stocks to buy according to hedge funds.
Potash is a group of minerals and chemicals that contain potassium, a vital nutrient for plants and animals. The term refers to compounds including potassium sulfate, potassium-magnesium sulfate, potassium nitrate, potassium carbonate, potassium oxide, and potassium chloride. Among these, potassium chloride (KCl), also known as muriate of potash (MOP), is the most commonly produced and used form of potash.
Potash is primarily used to produce fertilizers, which are essential for plant growth and development. Fertilizers containing potash help to support plant growth, increase crop yield, and enhance disease resistance. Additionally, potash helps to improve water preservation, making it an indispensable supplement to the natural nutrient content of soils. Soils often lack these essential nutrients, or growing crops have depleted them, making potash a necessary addition to maintain soil fertility. With approximately 95% of potash being used in fertilizers, its role in agriculture cannot be emphasized enough. The remaining 5% is used in the production of potassium-bearing chemicals, such as detergents, ceramics, pharmaceuticals, water conditioners, and alternatives to de-icing salt.
READ ALSO: 15 Energy Infrastructure Stocks That Are Skyrocketing and 12 Best Middle East and Africa Stocks To Buy Right Now.
Potash is mined from underground deposits, either through conventional underground ore mining or by injecting water into the underground ore body and extracting the resulting brine. According to a report by the Canadian Government, potash production was estimated at 67.5 million tonnes globally in 2023, with Canada contributing 32.4% of the global supply. Canada, Russia, and Belarus dominate global potash production and accounted for 65.9% of the total in 2023. Canada is the world’s largest producer and exporter of potash, with 11 active mines in Saskatchewan, producing 21.9 million tonnes and exporting 22.8 million tonnes in 2023, which accounts for over 41% of global exports.
Potash prices have fluctuated over the years, declining from 2013 to 2016 and remaining relatively low until 2020. However, in 2021, prices rose sharply due to strong demand, and the surge continued into 2022, peaking at $1,202 per tonne in April, driven by geopolitical tensions and the Russian invasion of Ukraine. By June 2023, prices had fallen to $328 per tonne as global supply concerns subsided.
Potash is a vital nutrient for plants and animals, and its importance in fertilizers cannot be overstated. As the world’s population continues to grow, the demand for potash is likely to increase.
Aerial view of an open pit mine, with workers extracting minerals.
Our Methodology
To compile our list of the 11 best potash stocks to buy according to hedge funds, we sifted through financial media reports and potash-related ETFs to find companies that are involved in the production and processing of potash. We then used Insider Monkey’s hedge fund database to rank 11 stocks with the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 30
Rio Tinto Group (NYSE:RIO) is a global mining leader with a diverse portfolio of projects spanning 18 countries and eight commodities. Rio Tinto Group (NYSE:RIO) has a significant stake in the potash mining industry in Saskatchewan, Canada, through its joint venture company with North Atlantic Potash Inc., a subsidiary of Acron Group. This joint venture company known as CanPacific Potash Inc., is represented by Rio Tinto Potash Management Inc.
CanPacific Potash Inc. holds nine mining leases and one exploration permit for a large mining property covering approximately 1,960 km2 in Saskatchewan, Canada. The area is rich in potash deposits and is considered a long-term investment in the potash resource base. The mining property is divided into two promising clusters, including the Albany project, which comprises six parcels located in the southern part of Saskatchewan, and the Foam Lake project, which consists of four parcels in the northern part of the exploration and mining area in the province.
The Albany project spans an impressive 1,350 square km and boasts an enormous reserve of 793.4 million tonnes of potassium chloride (KCl), with 77.6 million tonnes classified as proven and 715.9 million tonnes as probable, as confirmed by the NI 43-101 report. This vast reserve is sufficient to sustain a steady mining operation for over 200 years, with a potential annual production rate of 3.25 million tonnes. The unique combination of reserve volume, KCl concentration, formation temperature, and strategic location makes the Albany project one of the most promising solution mining opportunities globally, offering a highly attractive and long-term prospect for potash extraction.
Overall RIO ranks 4th on our list of the best potash stocks to buy according to hedge funds. While we acknowledge the potential of RIO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RIO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
