Wet purification of phosphoric acid "blue ocean" to test the water, gold panning or sand panning?

French chemist Lavoisier may not have predicted when he first studied phosphoric acid in the 70s of the 18th century, and what huge industrial value
phosphoric acid will have today, more than 200 years later.
As the intermediate core product of phosphorus chemical industry, phosphoric acid has been widely used in fertilizer, pharmaceutical, coating, plastic, printing and dyeing, food and other fields
.
In recent years, with the heating up of new energy development, wet purification phosphoric acid (PPA) projects have blossomed everywhere, becoming a "blue ocean" field
that has attracted much attention in recent years.

However, a number of industry insiders recently interviewed by a reporter from China Chemical Industry News believe that the prospects of PPA projects are good and investment is getting hot, but whether the "blue ocean" is gold or sand is affected by many factors, and the layout of enterprises still needs to be cautious, and it is not advisable to blindly test the waters
.

China is the world's first phosphate mineral exporter, phosphate resources are mainly distributed in Hubei, Yunnan, Guizhou, Sichuan, Hunan and other places
.
Relying on phosphorus resources, China has established a number of phosphorus chemical enterprises
.
The picture shows the phosphate mining site
of a company.

Status: The annual production capacity of PPA continues to increase in three years, or from 2.
45 million tons to 6.
48 million tons

In October 2022, the 400,000 tons/year PPA project of Guizhou Phosphating Group Kaiphos Co.
, Ltd.
in Kaiyang was successfully commissioned and produced qualified products
.

"According to different production processes, phosphoric acid can be divided into thermal phosphoric acid and wet phosphoric acid
.
Thermal phosphoric acid refers to phosphoric acid
produced from yellow phosphorus.
Wet phosphoric acid refers to phosphoric acid
obtained by reacting strong acids with phosphate ore.
In the process of acidification of the latter, a large number of anions and cations enter the phosphoric acid system, and only through deep purification can it become industrial, food grade and electronic grade products, that is, PPA
.
Qian Lining, deputy secretary-general of the China Inorganic Salt Industry Association, told reporters
.

"Unlike other countries, China has a large number of yellow phosphorus production enterprises
.
They rely on phosphorus resource production areas and abundant hydropower resources, and have a comparative advantage in cost
.
Q Lining said, "In previous years, due to the low price of raw material yellow phosphorus, China's thermal phosphoric acid production has always accounted for a large
proportion.
”

However, with the continuous construction or expansion of PPA production capacity in China, in 2021, China's PPA production exceeded thermal phosphoric acid
for the first time.
Since then, driven by the rapid growth of the new energy industry, the investment enthusiasm of PPA has gradually increased
.
The reporter combed and found that in the fourth quarter of 2022 alone, there were several market trends
related to PPA projects.

On December 29, 2022, Liuguo Chemical released a plan for the non-public offering of A-shares
.
The offering intends to raise no more than 800 million yuan, which will be mainly used for the "280,000 tons/year battery-grade refined phosphoric acid project"
after deducting the issuance expenses.

On November 29, 2022, Oriental Shenghong announced that it will build a 1.
8 million tons/year mineral processing unit, an 800,000 tons/year sulfur acid production plant, a 400,000 tons/year wet phosphoric acid plant, and a 280,000 tons/year wet phosphoric acid purification plant in Yidu Chemical Park, Yichang City, Hubei Province
.

On October 8, 2022, the 400,000 tons/year PPA project of Guizhou Phosphating Group Kaiphos Co.
, Ltd.
in Kaiyang was successfully commissioned and produced qualified products
.
The commissioning of the project will increase the PPA production capacity of Guizhou Phosphating Group to 1.
6 million tons/year
.
Subsequent expansion through existing projects, it is expected that by the end of the "14th Five-Year Plan", the company's PPA production capacity will reach 3 million tons per year
.

According to the reporter's understanding, in 2023~2025, there will also be Chuanheng Co.
, Ltd.
, Yuntianhua, Hubei Xingfa, Jiashili, Hubei Sanning, Hubei Yihua, Zhongfu Group, Sinochem Fuling, Chuanjinnuo, Sino-Arab Fertilizer, Xinyangfeng, Yibin Tianyuan, Longpython Group and other enterprises plan to invest in PPA projects
.
According to the planning of these enterprises, the national PPA production capacity is expected to reach 6.
48 million tons/year by 2025, compared with 2.
45 million tons/year
in 2022.

Reason: The lithium iron phosphate market is good The cost of PPA ton is more than 3,000 yuan lower than that of thermal phosphoric acid

Why is the industry unanimously eyeing PPA projects?

The most direct reason is that the great development of the new energy industry in recent years has led to an increase in the demand for lithium iron phosphate, which in turn has led to an increase
in the demand for upstream phosphoric acid market.
According to data released by the Power Battery Application Branch of the China Chemical and Physical Power Industry Association, the shipment of lithium iron phosphate materials in the Chinese market in 2021 reached 480,000 tons, an increase of nearly 2.
5 times
over 2020.
In 2022, shipments of lithium iron phosphate materials are expected to reach 1.
05 million tons, a year-on-year increase of 118.
8%.

Rising demand has also led to higher prices
.
According to business agency data, the price of lithium iron phosphate in January 2022 was 105,000 yuan / ton, and at the end of December that year it was 168,000 yuan / ton, an overall increase of 60% throughout the year, an increase of 63,000 yuan / ton
.

"Where does phosphorus, an important element in lithium iron phosphate, come from? It's
from phosphoric acid.
There are several lithium iron phosphate process routes, and the current mainstream process is made with iron phosphate as a precursor
.
To make iron phosphate, the cost of phosphorus accounts for more than
50%.
Qi Lining said, "Since the second half of 2020, the amount of lithium iron phosphate in power batteries has grown rapidly
.
The wet phosphoric acid is deeply purified, and its product quality is basically the same as that of thermal phosphoric acid, which can meet the production requirements
of lithium iron phosphate materials.
”

The person in charge of a phosphoric acid enterprise in the southwest region told reporters that with the increase in market demand for PPA, coupled with considerable profits, more and more companies have begun to layout PPA and try to enter the market to share the "cake"
.
Some companies also plan to use PPA as the "fulcrum" to lay out battery-grade monoammonium phosphate, iron phosphate, lithium iron phosphate and other materials
.

Driven by demand, the price of phosphoric acid has also continued to rise
.
In 2021, the price of phosphoric acid rose sharply, and it became the "price king of price increases" in September of that year, rising from 7,650 yuan / ton at the beginning of the month to 19,300 yuan / ton at the end of the month, an increase of more than 150%, a year-on-year increase of nearly 300%; Since May 2022, the price of phosphoric acid has continued to rise, and by late September of that year, it has risen from about 11,000 yuan / ton in May of that year to 17,000 yuan / ton
.

Another important reason why companies are competing for PPA projects is their significant cost advantage
over thermal phosphoric acid.

"Thermal phosphoric acid is produced
from yellow phosphorus.
The power consumption of electrolytic yellow phosphorus is 13000~15000 kWh
per ton.
The energy consumption of yellow phosphorus raw materials is high, and the cost of making downstream phosphoric acid is correspondingly high
.
Qianlining said that the raw materials of wet phosphoric acid (mainly sulfuric acid and ore) are cheaper, and the energy consumption of the purification process is also low, making the production cost of PPA 3000~4000 yuan / ton
lower than that of thermal phosphoric acid.

In addition, the "dual control" of energy consumption in the past two years has led to a sharp increase in the price of yellow phosphorus, making the cost advantage of PPA more prominent
.
According to the reporter, the price of yellow phosphorus was 17,000 yuan / ton at the beginning of 2021, rose to a staggering 60,000 yuan / ton in September 2021, and after several adjustments, it was about
34,000 yuan / ton at the end of December 2022.
The cost of hot phosphoric acid raw material yellow phosphorus continues to increase, while the cost of wet phosphoric acid increases very little
.
In addition, PPA can save 1.
8 tons of standard coal
per ton of product compared to thermal phosphoric acid.
The large cost difference has led to stable profitability, coupled with strong market demand, which directly leads to the continuous emergence
of new PPA capacity.

In response to the situation of enterprises rushing to launch PPA projects, Li Guofu, chairman of Shenzhen Tenglongyuan Industrial Co.
, Ltd.
, believes that it is the general trend, because from the perspective of cost, wet phosphoric acid has obvious advantages
over thermal phosphoric acid.
He told reporters that the company's main business is surface treatment and water treatment series chemicals, with an annual consumption of nearly 100,000 tons of phosphoric acid, which is mainly used for surface treatment
for downstream customers.
At present, the cost of purchasing PPA is 8%~10%
lower than that of thermal phosphoric acid.

In fact, thermal phosphoric acid is increasingly being squeezed
due to its high energy consumption and cost.
In foreign countries, industrial phosphoric acid, which is mainly thermal phosphoric acid, has been gradually replaced
by PPA.
The proportion of PPA in industrial phosphoric acid in the United States reached 100% in 2009; In 2014, the proportion of PPA in Europe reached more than
90%.

In China, PPA is also an industry
that encourages development.
According to the project manager of an engineering company, the PPA project is in line with the guidance direction of national and local industrial incentive policies
.
For example, the Ministry of Industry and Information Technology Document [2015] No.
251 proposes to "encourage the development and creation of new industrial chains such as fine phosphorus chemical industry, wet phosphoric acid refining and deep processing based on industrial advantages"; The "14th Five-Year Plan Development Ideas for Phosphate Compound Fertilizer" issued by the China Phosphate Compound Fertilizer Industry Association proposed to develop a low-cost, high-yield wet phosphoric acid refining process route; The "Petrochemical and Chemical Industry Development Plan (2016~2020)" proposes that the phosphate fertilizer industry should build a new industrial chain such as fine phosphorus chemical, wet phosphoric acid refining and deep processing
.
The project manager said that the use of wet process is expected to reduce the production cost of phosphoric acid by an average of 20%~30%, and the comprehensive energy consumption by more than
50%.

Problem: Investment still has hidden risks, phosphogypsum problems and overcapacity cannot be ignored

Attracted by the lithium iron phosphate market dividend, it has been common in the phosphorus chemical industry
.
Lithium iron phosphate has also become the "third sub-industry"
of phosphorus chemical industry alongside traditional phosphate fertilizer and fine phosphorus chemical.
But is such a dividend sustainable? Are there any risks? Many respondents believe that risks cannot be ignored
.

The most interesting issue is phosphogypsum
.

Due to the potential safety and environmental protection hazards, the treatment and utilization of phosphogypsum is a worldwide problem, which will consume a lot of capital and energy
.
"Environmental protection is probably the biggest challenge
.
Because PPA is developed from wet phosphoric acid and is the product of the reaction of phosphate ore and strong acid, phosphogypsum
is produced by design.
There is no escape from this problem
.
Q Lining said, "The purification process of PPA generally adopts the extraction method, and the extraction yield is 50%~60%, which means that about half of the
acid cannot be used directly.
" In the context of stricter environmental protection requirements, the absorption of phosphogypsum is a headache for any enterprise, because it is difficult to produce added value
by treating phosphogypsum.
If phosphogypsum cannot be absorbed, phosphoric acid cannot go out
.
The extraction rate is 50%, what is the remaining 50% for? It can only be digested by making phosphate fertilizer or feed-grade dicalcium phosphate (referred to as feed calcium), otherwise the industry is unsustainable
.
”

The risk of overcapacity also exists
.

"Phosphate capacity itself is
excessive.
China's annual phosphate fertilizer production capacity is about 21 million tons (P2O5 counting, the same below), the output is less than 17 million tons, and the actual domestic consumption is 10 million ~ 11 million tons
.
According to the national requirements for weight loss and efficiency, phosphate fertilizer consumption will decline, according to the demand of 1.
8 billion mu of arable land, the future may be less than
10 million tons per year.
Compared with the current production, we still have nearly 7 million tons of phosphate fertilizer to consume
every year.
Phosphate ore resources are also strategic resources, and exports are restricted
.
What to do if there is so much phosphate fertilizer? So I found the PPA field, everyone did it, and the development speed was very fast
.
But lithium iron phosphate for phosphorus consumption is not as high as phosphate fertilizer, if everyone goes to the new project, lithium iron phosphate and PPA is also excessive, the future may be the same as the current state of phosphate fertilizer, is the 'blood price' model
.
Q Lining said
.

In addition, when PPA production capacity and production volume increase significantly, a new problem of "price dominance" will appear
.

An industry insider said that the current high profitability of the PPA market is based on the high yellow phosphorus cost of thermal phosphoric acid, which is profitable on the cost difference, but this profit is not sustainable
in the future.

"Due to the proportion of production, in the past, the phosphoric acid market was dominated by thermal phosphoric acid, that is, the price of thermal phosphoric acid was used to define the price of industrial phosphoric acid
.
When the market demand is insufficient, PPA is not a market-leading product, it follows the rise and fall of thermal phosphoric acid
.
When thermal phosphoric acid is sold to 10,000 yuan per ton, the price of PPA will be a little lower than that of thermal phosphoric acid to attract customers to purchase
.
If production continues to increase, then cost-advantaged PPA will become market-dominant, and phosphoric acid prices will be defined
by PPA.
Q Lining explained
.

The impact of the future slowdown in the new energy market cannot be ignored
.

Li Guofu believes that the current new energy market represented by lithium iron phosphate continues to improve, and the industry generally expects that it will continue to increase before 2025, bringing development dividends
to PPA.
"What will be the state of the PPA market after 2025? This is difficult to predict
.
However, the total amount of phosphorus resources is limited and relatively scarce, and new energy may not have such a huge volume and multiply growth in recent years, and the market may gradually become oligopolistic competition
.
Small and medium-sized enterprises, or phosphoric acid projects that are blindly launched, may be more likely to be eliminated
by then.
Li Guofu analyzed
.

Recommendation: Enterprises should also be cautious when entering the market, and should comprehensively consider various factors

A lithium iron phosphate production line
of an enterprise.

Many people in the industry believe that enterprises should make prudent decisions when entering the PPA field, especially new projects, to avoid losses
caused by blind investment.

Qianlining said that due to objective difficulties such as the difficulty of phosphogypsum treatment, compared with traditional phosphate fertilizer enterprises, the newly established independent PPA manufacturers will not have an advantage
in the future market competition.

"For traditional phosphate fertilizer enterprises, to start PPA, add a purification device on the basis of the existing wet phosphoric acid plant, and only adjust the product structure
.
" Because the main business of the enterprise is to do phosphate fertilizer or feed calcium, you can adjust the proportion of phosphate fertilizer slightly according to market demand, you can open up the PPA market, the only thing you need to care about is how to treat phosphogypsum well
.
For example, Guizhou Phosphating Group, which currently has the largest domestic PPA production capacity, has such an advantage - it not only makes phosphate fertilizer, but also introduces digestion and development of wet phosphoric acid technology
very early in China.
Such enterprises can take advantage of this wave of new energy industry development to optimize product structure
.
The premise is that the company originally had a large wet phosphoric acid production capacity, but the end product structure was adjusted, and the source did not increase much, nor did it change the main business
too much.
Q Lining said
.

Some insiders believe that the production of PPA by the head phosphate fertilizer enterprise can extend the industrial chain of the phosphate fertilizer industry, increase phosphorus chemical products with high added value, lay the foundation for the further production of pyrophosphate, metaphosphate, sodium phosphate, potassium phosphate and other products, and maximize the value of phosphorus resources
.

"But for some new PPA companies, the industry is not very optimistic, because some companies originally did not do phosphorus chemicals, but only entered
because of the pursuit of profits.
" To do phosphorus chemical industry, there must be resources, technology, market, and industrial layout
.
Phosphate fertilizer itself is an excess industry, if blindly entering the 'blue ocean', it will bring great risks
to investment enterprises.
Q Lining said
.

As the person in charge of phosphoric acid downstream user enterprises, Li Guofu also paid attention to the situation of
PPA projects in the industry.
He told reporters that the reason why Tenglongyuan chose PPA is that PPA performance is similar to thermal phosphoric acid, and the cost is relatively advantageous
.
When choosing suppliers, they pay more attention to product quality, production stability and timely supply, and sales service and after-sales service are equally important
.
Therefore, they prefer to cooperate
with leading enterprises.

"In recent years, many companies have indeed adopted different technical paths to launch new wet phosphoric acid projects
.
Our company's own demand and supply of phosphoric acid is relatively large, and we prefer stable suppliers
with a national layout and obvious leading production capacity.
Many new PPA projects, whether it is product output or comprehensive quality, there is still a certain gap compared with the head enterprises, and may meet the demand in some segments, but it should be used in high-end applications such as surface treatment and fine phosphorus chemicals, and there is still room
for improvement.
Li Guofu said
.

An industry insider, who did not want to be named, believes that in the context of hotning market competition, enterprises should comprehensively consider various factors in new PPA projects, such as whether the source and quality of phosphate ore are guaranteed, whether they have talent and technical advantages, whether they have industrial layout advantages, market operation advantages, brand advantages, as well as land, raw materials and capital advantages
。 "In order to achieve greater competitive advantage, enterprises should have a good economic foundation and good comprehensive supporting capabilities, sufficient water and electricity resources, rich phosphate ore and coal resources, can give full play to regional advantages and industrial synergy advantages, and achieve resource conservation and environmental friendliness
through cascade utilization of energy and resources.
" If it can accelerate the expansion to the downstream and high-end, the competitiveness of the project will be stronger
.
The industry insider said
.
(The picture is an infographic)