Brazil can get for the largest group in fertilizers

In less than 10 years, Brazil can become protagonist global producer of fertilizers, thanks to recent discovery of a large deposit of potassium-one of the main inputs for the manufacture of the product and that has 90% of imports in the country-in the Amazon basin. Responsible for research in the area is the Potassium of Brazil, a subsidiary of Brazil Potash Corp., a company based in Toronto, Canada. If confirmed, the reservation will offer 500 million tons and is expected to put the Brazil as the third largest potash producer in the world, behind Canada and Russia.
"Our preliminary calculations show that this will be the largest active reserve of the country," said the DCI Brazil potassium CEO, Helio Diniz. The only active mine in the national territory of Taquari-Vassouras is (IF), leased by Petrobras for the Valley, which has in the fertilizer business his great "gold mine" for the coming decades. "The area that research has the potential three times greater than that of the Valley," says Day. The annual production of the world's largest mining company potassium currently revolves around 700 thousand tons. At the height of the life of the mine, in mid-2015, Is expected to produce 1.2 million tons per year.
The amount is not greater, however, that the designed by Brazil potassium. "Our production estimates reach 2 million tons per year," says the CEO of the company. The content of potassium chloride contained in the mine is estimated at around 30%, i.e. are extracted 7 million tons of ore per year, of which 70% will result in conventional salt (NaCl) and 30% potassium chloride, used for the manufacture of fertilizers.
Today, China is the largest consumer of potash in the world and this should further increase volume until 2050, when global authorities predict that 800 million Chinese migrate from the countryside to urban centres, leading to an explosion of food consumption. The role of fertilizers will be essential in this scenario.
The Brazil still imports most of the fertilizers that consumes about 70%-of the total, according to the National Association for the diffusion of fertilizers (Walks). And the little that the Brazil produces is made with imported inputs as nitrogen, phosphorus and potassium are widely imported in the country.
According to calculations of Brazil, the potassium extraction of ore cost would be around $ 85 a ton and, today, the price is anywhere from $ 400 to $ 500 a ton for withdrawal in the mine. "Not to mention the shipping to Brazil, which sells for less than $ 180 a ton," says Day. He explains that, with local production, Brazilian companies would eliminate the cost of shipping.
Day says that the ore world consumption revolves around 5 million tons per year. By 2025, this volume must be three times higher. "Half of the area can produce potassium is in Brazil," he points out. Until then, if the company's operations are in full steam, Vale's production if the addition of Potassium of Brazil, resulting in almost a third of world consumption. "Brazil would be a protagonist in the production of fertilizer," says Day.
The company has already invested around r $ 110 million in probing phase and should contribute about $ 100 million this year. The Potassium of Brazil intend to perform the research project until mid-June 2014, when will enter with applications for licences to operate. The intention is to finance 70% of the cost of approximately $ 2 billion through development banks-including Banco Nacional de Desenvolvimento Econômico e Social (BNDES) and the remainder through initial public offering (IPO).
"The rate of return is very high," says Day. Part of the amount will be destined for the logistic project, which includes a private port terminal in Manaus. "We are in a privileged location, with all the infrastructure ready. Our freight would be cheaper to Florida than to Canada, "he says.