How An Unassuming Geologist Cracked The Global Fertilizer Cartel

Forbes

a day ago

The eureka moment came in 2012, when professor emeritus William Harrison of the University of Western Michigan invited Ted Pagano, then a 35-year-old freelance geologist, to his 27,000-square-foot geological repository in Kalamazoo. A rock nerd's heaven, the warehouse's heavy-duty shelves feature crates of minerals from across the state. But Pagano was there to see something specific: the 80 pallets of rock cores donated in 2008 by the Mosaic Company, a large ($11.1 billion in 2024 sales) NYSE-listed potash specialist. Cores are standar­dized cylinders of rock, three feet long and four inches in diameter. These were recovered from some 75 wells drilled back in the early 1980s to depths 8,000 feet beneath Osceola and Mecosta counties, a sparsely populated swath of central Michigan, into a layer of rock rich in minerals deposited by an ocean that evaporated millions of years ago. Those minerals include salt (sodium chloride) and potash (mostly potassium oxide), which farmers prize as a fertilizer. It's a critical mineral—the U.S. uses 5.3 million tons annually and imports 95% of it, mostly from Canada.
jamel toppin for forbes
Pagano was excited to see these cores because he hoped they would prove his hunch: that Mosaic had been sitting on a potash motherlode in Michigan far bigger than anyone realized. He suspected that the deposit, if properly developed, could provide 1 million tons of fertili­zer per year for American farmers. That would be nearly seven times the volume that Mosaic's little 150,000-ton-per-year plant in Hersey, Michigan, was producing. Putting up $70,000 of his own money, Pagano had formed Michigan Potash & Salt Company and was already leasing up mineral rights from ranchers and farmers in the area. Even so, Pagano says, 'I went to the core lab with skepticism.'
Harrison and Pagano cut open sealed plastic bags to extract rock wrapped in newspapers from 1984. Testing revealed thick deposits of some of the highest-purity potash deposits ever discovered. They were especially excited when they opened the cores from a well called Stein 1-7. It had been drilled miles from the area consi­dered the sweet spot, so Pagano thought the odds were high that these cores would show low concentrations of potash. Instead, they were just as good. This was proof that the actual extent of the Michi­gan potash deposit was considerably larger than even experts like Harrison had expected. Pagano began leasing like crazy: Soon he had a position covering 15,500 acres (about 24 square miles) of what has proven to be one of the biggest potash deposits in the United States.
'I was certain the Stein well would be a poor showing. Seeing it was just as good as the best well was astounding,' says Pagano, now 49. His Michigan Potash is on the cusp of closing on $1.8 billion of financing for a new mine, including a $1.3 billion loan from the Department of Energy and $500 million in equity being arranged by JPMorgan and Goldman Sachs. If all goes well, the mine will be churning out 1 million tons per year of potash (worth $350 million) and 1.3 million tons of salt (worth $80 million) by the end of the decade. With a resource base proven to be 130 million tons, they could keep that up for a century or more—and make Pagano, who owns 65%, very rich. Even now his stake is worth at least $300 million.
Potash Stash: Core samples extracted from 1.5 miles beneath central Michigan reveal high-purity potassium oxide, marketed as premium 'white potash.'
Pagano grew up in Greeley, Colorado, the son of a tax preparer and an assistant librarian. After graduating from Notre Dame in 1997, he earned a master's degree in petroleum engineering from the Colorado School of Mines. He got his start in the oil industry as a roustabout in Prudhoe Bay, Alaska, then worked as a geologist for Alaska's Bristol Bay Native Corporation. (He is part Aleut, the indigenous people of the Aleutian Islands.) From there he worked at Texaco, Chevron and Anadarko drilling shale oil wells in Colorado. In 2008, at age 33, he struck out on his own, initially planning to lease prospective oilfields in North Dakota's Bakken shale region, but land prices—which reached thousands of dollars per acre with a 20% royalty and five-year term—were too steep. Looking at other mineral trends in the northern Midwest, Pagano became fascinated with potash and puzzled by Mosaic's little Hersey operation. Why hadn't it expanded?[IMAGE]
Despite being based in Florida, Mosaic mines nearly all its potash in Saskatchewan, and sells it via Canpotex (Canadian Potash Exporters) through its 50/50 partnership with Canadian fertilizer giant Nutrien (2024 sales: $26 billion). Canpotex, alongside Belarusalki of Belarus and Russia's Uralki, make up an oligopoly that controls more than 70% of global supply.
After exhausting his own funds, Pagano raised $250,000 more from friends and family in exchange for 13% of his company. Since then, the only outside money Michigan Potash has taken is a $50 million grant from Michigan's state agriculture department in 2023 and a new $80 million grant from the USDA, crucial to getting through permitting.
When Pagano initially approached the U.S. Department of Energy for funding in 2021, he got the cold shoulder. Michigan Potash was tiny and unproven. But he and his team persisted—and in 2025, as the war in Ukraine dragged on, the DOE agreed to a 15-year, $1.3 billion loan. But it came with conditions: Pagano must raise $500 million in equity, and to reduce risk Michigan Potash will outsource construction under a lump-sum, turnkey contract. 'Now [the DOE] look like geniuses,' says Cory Christofferson, Michigan Potash's chief development officer.
Illustration by Patrick Welsh for forbes
By William Baldwin
What if we run short of potassium or phosphorus? That would be bad news for farmers and, by extension, the human race. It's an element—two elements—of the coming environmental doom postulated by the accomplished, but perhaps too pessimistic, money manager Jeremy Grantham. If you share his pessimism, it would make sense to acquire a stake in a potash and phosphate producer. Two of the big ones are Nutrien and Mosaic, both trading on the Big Board and both paying above-market yields. They are priced, respectively, at 23 and 19 times what Value Line sees for earnings this year.
William Baldwin is Forbes' Investment Strategies columnist.
To extract the potash, Pagano will use a form of 'in-situ,' or solution mining. He'll drill 8,000-foot-deep wells in pairs. One is the injection well, down which Michigan Potash will send hot water to dissolve potash and salt in place. The second is the production well; the solution travels up that well to the processing plant for separation and drying. The water is reclaimed, heated and sent back down the hole. From the surface the mine will hardly be noticeable and should be eligible for green tax credits. 'There's no hair on this project that we're ashamed of,' says chief operating officer Aric Glasser.
In all, Forbes estimates that costs should come to about $140 per ton; potash sells for about $350 a ton today. Global giant Mosaic can produce potash for less—about $80 a ton—but Mid­western farmers are still on the hook for another $80 per ton in rail shipping costs from Saskatchewan, 1,200 miles away, plus any tariffs that President Trump might choose to impose (currently 10% on Canadian potash). Agricultural giant ADM has already agreed to buy nearly all of Pagano's yearly potash production.
Mosaic rejected Pagano's offers to buy some or all of its remaining Hersey plant and, citing high costs, shut down its potash operation there in 2013. It sold the remaining salt processing operation to Cargill for $55 million. 'They thought they didn't have to worry about competition,' Christofferson says.
Vladimir Putin's February 2022 invasion of Ukraine changed that thinking. The EU banned the import or even transit of Russian and Bela­russian fertilizers. China banned potash exports to conserve supply for its domestic market. Prices soared to $1,200 per ton. To keep a lid on costs, neither President Biden nor Trump has banned or sanctioned imported Russian potash.
Every ton Pagano can supply domestically should make more potash available outside the U.S. in international markets including sub-Saharan Africa, whose farmers desperately need fertilizer. 'It takes a crisis to wake people up out of complacency,' Pagano says. And it takes an intrepid contrarian to challenge an oligopoly.