Potash proved to be good investment in 2006

Potash didn't exactly raise visions of profits dancing in investors' heads - until 2007.
What used to be low grade returns have become spectacular. Just look at returns by producers, Agrium, Potash Corp and Mosaic for the year.
Potash Corp's profit margins have swelled from $34 a tonne in 1996 to $87 a tonne. Current potash prices are in the $303 to $318 per tonne range.
Demand for potash has grown on average at three per cent per year over the past 10 years. Industry sources estimate demand will grow at 3.2 per cent annually over the next five years,.
Huge profits attract new players to the industry, or so the economists tell us. Evidently, the theory is right.
No new potash mines have been built in Saskatchewan since the 1970s, although a number of expansions have happened or are planned.
Most notably, industry crystal balls predict a deficit in potash fertilizer supply of 5.41 million tonnes - or one-third of demand - by 2011. That's enough market for a couple of new mines.
The price tag to build a new underground shaft and head frame, along with stables prices and low margins, has kept competitors from building.
An outlook for continued demand pressure as ethanol production drives corn planting and the need for feed grains as lesser developed countries devour more meat has three companies actively pursuing mines in Saskatchewan.
All three are in different stages of development.
Most advanced is Anglo-Mineral Resources, headed by Moose Jaw entrepreneur Todd Montgomery, now of Calgary.
The company has found a partner, world giant BHP Billiton, to buy a 75 per cent stake in the deposit, with no more Anglo funding needed until a mine is built. A feasibility study is planned for mid-2010.
If mine construction proceeds, look for production by 2012 or 2013.
Athabasca Potash sold $40 million in shares this month to fund development of the Burr deposit east of Saskatoon
Discovered in 1956, the estimated 73 million tonnes of potash was left in the ground for 50 years until prices warranted another look.
The company has yet to prove the deposit, with a prefeasibility study planned soon.
Investors owning 29 per cent of shares, and the largest holding by someone with close Chinese connections, means future financing should not be an issue.
The third new player - Potash One, formerly ISX Resources, and run by a passing acquaintance of mine from university days - is also advancing with leases north of the Kalium Mine at Belle Plaine.
Potash One operations have outlined two deposits with 430 million tonnes of indicated and inferred resources and plan to try and outline more tonnage.
An interesting evaluation would compare the three producers and the three wannabees on a share market value per tonne of resource.
The producers have run up to high valuations during the year while speculation has driven up the explorers' shares. At these prices, investors may want to wait for a setback before placing bets, unless they can stomach the risk of sudden southward price changes.
Bizword columns do not solicit buying or trading of securities. Investors need to do their own homework or consult advisers.

Ron Walter can be reached at 691-1264.