Source: Brazil Potash
Brazil Potash, a Canada-based potash mining company, has put forward a bold vision for a bold new potash project in Brazil that aims to both challenge the oligopoly entrenched in the industry and create a better future for Brazil. That project is the Autazes Project.
Currently, there are two main ways potash is mined – conventional and solution. Conventional mining entails the sinking of shafts to reach the underground potash and the use of boring machines to extract it for transport to the surface where it is concentrated into a saleable product. With solution mining, hot water is piped down to the underground potash to dissolve it for transportation back to surface for processing.
The state of the potash market is currently controlled by a small group of companies, known as an oligopoly. This control gives these companies a large amount of power over price and availability. Brazil is one country that is highly dependent on imported potash – the country imports 96% of the potash it needs out of which 47% comes from Russia and Belarus which are both sanctioned. This leaves Brazilian agriculture at the mercy of these foreign suppliers.
Brazil Potash will aim to challenge that market by introducing a new project with multiple competitive advantages. The first is the sheer size of the Amazon potash basin that Brazil Potash’s Autazes project will source its potash from. The Amazon potash basin is estimated to be one of the largest proven potash fertilizer projects in the world, comparable to the massive potash basins in Canada and Russia where ~80% of the world’s potash is sourced.
The project also has a major logistical advantage because it will be located on existing farmland near the Amazon river system. Thanks to the favourable infrastructure, ideal location, and a successful feasibility study and environmental and social impact assessment already complete, the Autazes project will be the lowest-cost source of potash for Brazil – a major shift for the industry and the country.
Currently, the company sees a life of mine of 23 years based on exploring only ~7% of the Amazon potash basins potential, with an estimated annual EBITDA of US$ 1.1 billion. Once the mine is producing, this could give the Brazil Potash an approximate market cap between US$ 7 billion and US$ 10 billion based on just its initial planned production of 2.4 million tonnes per year to supply ~20% of Brazil’s current needs.
The Autazes project is designed to be more than a game-changing potash mine. The company sees the project as an impact project with benefits across multiple social and economic factors. The project will create around 5000 direct and indirect jobs over several decades of operation that will have a positive impact on the local and regional economy.
Brazil Potash has a strong ESG policy in place, with plans for investing in local school programs, ensuring that no primary rainforest is affected by the project (small footprint) and that the potash supply will go on to facilitate the reuse of the existing arable land to help mitigate deforestation further. The company has estimated that the project will reduce greenhouse gases by more than 1.3 million tonnes per year.
Potash mining is a capital-intensive process, but with a strong project and a favourable market, Brazil Potash is well-positioned to take on the challenge and become a new player in the potash industry.
Brazil Potash has brought its Autazes project to a near construction-ready state having completed a bankable feasibility study, environmental and social impact assessment, and public hearings with over 4000 people including currently ongoing indigenous consultations.
The next stage will see the company raise the US$ 2.1 billion needed for the construction of the Autazes Project to bring it into operation to supply this essential nutrient to feed not only the people of Brazil but people globally.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.
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