Brazil Potash Corp. set to drastically change Brazil’s reliance on potash imports
Brazil Potash is developing a world-class scale potash basin in the state of Amazonas to become a key domestic supplier to Brazil’s booming agriculture sector.
Autazes, Brazil - Standing on the banks of the Madeira river, Brazil Potash Project Director Guilherme Jacome shields his eyes from the late afternoon sun as he watches a barge convoy loaded with soybeans chug past. The convoy is part of a steady stream of vessels heading to the Itacoatiara port located 60 km upstream where its cargo will be reloaded onto international freighters bound for overseas export markets.
“We are standing at the site of Brazil Potash’s future port facility, only 8 km away from the Brazil Potash mine site,” he explains. “No potash producer in the world will be able to beat us on our logistics cost to deliver potash to Brazilian farmers. We will fill barges here with our potash to send to the fertilizer blenders in the Cerrado (Brazil’s farming belt located in the centre of the country) and take advantage of backfreight on trucks during soybean harvest season. Our cost to mine, process and deliver potash will be equivalent to the importer’s delivery costs alone. We will have the lowest all-in delivered cost for the Brazilian market.”
The breathtaking growth of Brazil’s agriculture sector in the past 30 years has transformed the country from a net importer of food to the world’s top food exporter with its agribusiness representing 40 per cent of total seaborne trade and growing. With a comprehensive commitment to modern farming methods, mechanization and investments in infrastructure and scientific research, Brazil is now the biggest exporter of sugar, coffee, beef, orange juice and chicken and the second biggest exporter of soybeans in the world, according to the U.S. Department of Agriculture.
Yet with all these immense agricultural resources harnessed, Brazil remains sorely deficient in a key ingredient to grow crops and increase yields – fertilizers, and in particular, potash. Brazil is the world’s second largest and highest growth market for potash, but currently imports 95 per cent of its potash needs which travels 14,000 to 20,000 km from mines in the northern hemisphere to reach Brazilian fields.
Brazil Potash Corp. is gearing up to drastically change Brazil’s reliance on potash imports through the development of its Autazes potash project, located 120km south of Manuas in northern Brazil. Brazil Potash controls a basin twothirds the size of the entire Saskatchewan potash basin and roughly two times the size of the Russian Ural potash basin. Proven and probable reserves support more than 30 years of mine life based on drilling off only 10 per cent of the land Brazil Potash has permitted.
Within four to five years, Brazil Potash plans to be producing 2.4 million tonnes of granular potash per annum which will initially supply up to 25 per cent of Brazil’s potash needs. With 90 per cent of the land bank still to be developed and the deposit open to the north and south, Autazes rivals the world’s largest potash deposits.
Walking through what is now still a farmer’s field a short drive from the river, it’s hard to imagine the bustling enterprise this will become in a short time, but Jacome describes the future mine site Brazil Potash has planned. “The potash intercepts at Autazes occur at relatively shallow depths with an average grade of 31 per cent KCl. We have easy year-round access to the site via existing highways and the world’s largest navigable inland waterway nearby. Our plan is to build a conventional underground room and pillar mine. Tailings will be back-filled into the underground workings thereby reducing the surface footprint and waste storage facilities.”
Visitors to the nearby town of Autazes are greeted by a sign that reads, “Welcome to the Land of Milk & Potash”, proudly proclaiming the local community’s support for the Autazes potash mine and its farming roots. The town of 32,000 people is built on small scale light industry, while the rural population scattered through the historically impoverished region has relied on subsistence farming, hunting, fishing, artisanal mining and illegal deforestation. The new mine will have a profound impact on the region, creating hundreds of new jobs both during construction and later during operation, and spurring economic growth throughout the region for the various supporting enterprises that will emerge such as accommodation, transportation services, food and beverage suppliers, construction and retail.
Gaining membership in such a tight-knit community can be a challenge, but Brazil Potash CEO Matt Simpson says his team has put a great deal of effort and thought into proactively engaging with all stakeholders in the local community and the response has been overwhelmingly positive.
“We realize that our presence here will change the face of this community and it’s been very important to us to listen to our neighbours, hear their concerns and suggestions and make sure that we are all working towards the same result. We have open lines of communication and have held numerous seminars, learning events and workshops to keep everyone updated on our plans.”
One long-term benefit the people of the region will enjoy is gaining access to the electrical grid. Without powerlines many people currently rely on inconsistent, expensive and dirty diesel generators for their energy needs. Brazil Potash will install a 165km electricity line that besides providing the hydroelectric required power for the Autazes mine will also connect thousands of households to the national grid.
More jobs and economic activity in the region will translate into higher tax revenues for the government, allowing for improvement to local schools, water and sanitation infrastructure, roadworks and healthcare.
At a national level, Simpson believes Brazil Potash has a significant contribution to make to the country’s agriculture sector by reducing dependence on foreign imports of potash thereby improving the trade balance and increasing long-term food security.
Simpson adds, “We will be providing Brazilian farmers with a more accessible and sustainable source for their potash needs through domestic production. Currently potash used in Brazil is primarily sourced from Canada and Russia, traveling thousands of miles by rail, boat and truck to reach Brazilian fertilizer blenders. Besides the economic cost of this long-distance travel, there is also an environmental cost from the burning of fossil fuels for transportation. We estimate that by displacing these potash imports, we will reduce greenhouse gas emissions by approximately 508kt per year of CO2eq – that’s equivalent to taking 100,000 cars off the road!”
Recently Brazil Potash was recognized as the top engineering project currently underway in the agribusiness sector of Brazil by the Federal University of Minas Gerais (UFMG). Every year, UFMG conducts a survey of over 3,000 alumni of its Engineering School, asking them to identify which companies in each sector demonstrate engineering excellence. UFMG is located in the city of Belo Horizonte in the Minas Gerais state and is one of the five largest universities in Brazil. This was an important honour for Brazil Potash because it demonstrates the rising profile of the project within Brazil and in particular within the booming agribusiness sector, and clearly demonstrates the world class quality of the technical team under the leadership of Project Director Jacome.
Jacome is bashful when asked about his team’s achievement, but there is no doubt Brazil Potash has been steadily advancing its exploration and development since 2009 when the Amazon basin was first identified by the team. With an experienced and talented technical team of geologists, engineers, mine operators and environmental specialists drawn from global mining giants such as Vale, Falconbridge, Xstrata and Rio Tinto, Brazil Potash is now the largest greenfield potash project in the world. Important milestones have included over 59km of drilling (which makes Brazil Potash one of the most prolific drillers in Brazil in recent years), an extensive Bankable Feasibility Study compiled by respected engineering firms Worley Parsons and Ercosplan, successful Environmental Impact Assessment completed by Golder Associates and granting of the Preliminary License by the Environmental Protection Agency (IPAAM).
To date, over US$190 million has been invested in Brazil Potash by long-term private equity and sovereign wealth investors. Simpson notes, “Our shareholders are patient investors who understand the long-term value proposition of creating a major potash producer in Brazil. With their support, we have been able to move this project forward to a near shovelready state.”
Simpson concludes, “We see ourselves as a disruptor in the industry. For a long time, the potash sector has been concentrated in the hands of a few producers. These big potash producers know that they can rely on Brazil to buy more and more potash every year to feed its growing agriculture sector, but soon all of that is going to change. With only 10 per cent of our land drilled off, we will be able to supply a quarter of Brazil’s potash needs for 34 years and our plan is to continue to expand our resource base. This is a multi-generational potash asset that’s going to change the dynamics of the global potash trade for years to come.”