Fertiliser maker is set for growth spurt

MINING is important in Brazil, but agriculture is big business too. The country is the fourth largest consumer of fertiliser in the world, just behind China, America and India. Yet it produces only 4 per cent of the fertiliser it needs, buying the rest from abroad.

Imported fertiliser has tripled in price over the past two years, putting intense pressure on the cost of agricultural produce, from soybeans to coffee to sugar.

These commodities are grown in abundance in the fertile state of Minas Gerais, a few hundred miles from Sao Paulo and Rio de Janeiro. This is where Harvest Minerals has developed the Arapua project, a site producing pure organic fertiliser made from weathered lava, which is simply crushed, bagged and sold direct to local farmers.

Harvest was founded in 2015 and farmers were initially wary of its brand of fertiliser, KP Fertil. But word has gone around and KP Fertil has now been credited as a bona fide muckspreader by the Brazilian authorities.

On June 30, chief executive Brian McMaster revealed that Harvest sales rose 149 per cent to A$4.9 million (£2.8 million) and said this year should deliver strong profits. The group reports in Australian dollars because it was originally listed and registered in Australia, although it is now just on AIM.

McMaster also said he expected to sell 150,000 tons of fertiliser this year, a 76 per cent increase over 2021. This should feed through into higher profits, as McMaster has already driven through three prices rises in the past six months and a fourth is imminent.

Yet Harvest shares have fallen 23 per cent to 13p in eight weeks, after Harvest wrote off the value of some non-core assets and wrote down an old bad debt. This left Harvest with a pre-tax loss of A$4.2million.

The future, however, looks considerably brighter. Arapua is winning new business, customers keep coming back and the group should be a key beneficiary of Russia-induced turmoil. McMaster is even talking about dividends for shareholders.

Harvest has bought another asset too, Miriri in North-East Brazil. The site will take time to develop but McMaster is hoping to produce something akin to KP Fertil up there.