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Brazil on cusp of domestic potash and phosphate revolution

25th April 2013

By: Simon Rees

Creamer Media Correspondent

  

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TORONTO (miningweekly.com) – Fertilisers and their increased application will be vital in driving Brazil’s status as a global agricultural powerhouse. The country is already the world’s fourth-largest consumer, according to Reuters.

Rather than rely on imported raw material for fertiliser production, Brazil’s government is keen to facilitate the growth of a robust domestic potash and phosphate industry. Several significant projects are already in various stages of development, including those being advanced by MBAC, Brazil Potash and Verde Potash.

MBAC

MBAC is close to bringing on stream its Itafós project, located in the vast Cerrado area, Brazil’s new agricultural frontier.

Construction work is just more than 90% complete, with proven reserves standing at 15.9-million tons and probable reserves at 48.9-million tons. Life of mine is estimated at 19 years, with an average ore grade of 5.08% P2O5 (phosphorus pentoxide). Yearly output is estimated at an initial 500 000 tons single super phosphate (SSP).   

“We’ve accomplished a lot over the last four years: we’ve drilled over 75 000 m; obtained the necessary permits and filed the necessary technical reports; [and] secured financing in difficult market conditions,” MBAC VP corporate development Steve Burleton told Mining Weekly Online.

“The mine is complete and licenced, and we’ve stockpiled about 250 000 t of ore so far. The beneficiation plant is being commissioned and expected to come on stream in mid-May,” he said.

“Our sulphuric acid plant is also nearing completion. Here we’ll combine the phosphate concentrate with sulphuric acid to produce SSP powder … We’re also building a plant to produce granular material,” he added.

“We aim to come on stream in June or July, selling product shortly thereafter,” he said. “Our infrastructure is pretty good, with decent roads. At most, our customers will be located 500 km to 700 km from the plant.”

MBAC is also developing the Santana project in southern Paraíba. “We’re now working on a prefeasibility study that should be ready around the end of Q2,” Burleton said.

“Santana is located just north of Matto Grosso state, which is the largest farming district in Brazil and also its largest fertiliser-consuming region,” he said. “But right now, the state is supplied by competitors far to the south or from imported material ... So we’d have a huge competitive advantage; we’d be just 300 km to 400 km away.”

Potash Brazil

Potash Brazil is advancing the Amazonas potash project located in northwest Amazonas state. The focus has been centred on the Autazes deposit and an independent National Instrument (NI) 43-101-compliant technical report with an inferred resource will be released shortly, Potash Brazil MD for Brazil operations Helio Diniz told Mining Weekly Online.

“The indication is that the global resource will be above 500-million tons for grading over 30% KCl [potassium chloride],” he said. “The mineralisation is conventional: good grades, with good geology … it will be a traditional underground mine.”

Rather than rely on rail or road, Brazil Potash will use rivers to move its output. “The project is located by a large river … Most Brazilian fertiliser producers are upriver, so we’ll be able to ship direct,” Diniz said.

“In the next 12 to 18 months we’ll complete the feasibility study and usual permitting process,” he said. “Construction will take about three or four years, which means we aim to start production at the end of 2017 or the start of 2018.”

“Brazil’s KCl [potassium chloride] consumption is estimated to reach 15-million tonnes by 2025, so our initial output will be Brazil-focussed,” he added.

The basin in which the property lies contains vast, untapped potential, Diniz said. “Its 400-km long and we’ve only really just started exploration. The basin is similar in age, geology and mineralogy to Saskatchewan and the Urals.”

“Within a generation the Amazonas basin could be as large Saskatchewan, so it’s exciting,” Potash Brazil’s CEO David Argyle told Mining Weekly Online in a separate interview.

“Brazil is a resource-rich country with policies in place that enable investors to put money into assets that will move into production. And this is the objective: it’s not to just delineate a resource and then have it sit there; the goal is production,” he stressed.

Verde Potash

Verde Potash is developing its Cerrado Verde potash project located in Minas Gerais state. It will be an openpit operation, producing KCl by processing verdete slate through a bespoke procedure that incorporates the use of a rotary kiln.

Total in-situ resources are 253-million tons potassium oxide. The first-phase capital expenditure (capex) is estimated at $598-million, with the project scheduled to come on stream during 2015. Initial output will be around 600 000 t/y of granular KCl.  

“Right now we’re working on a bankable feasibility study, which is looking good,” Verde Potash president, CEO and director Cristiano Veloso told Mining Weekly Online.

“We’ve a total of over 40 000 m of drilling. This has given us significant measured and indicated resources, the details of which will be released together with the feasibility study [to be unveiled during Q2 2013],” he said

“Our sales price will be calculated on a delivered basis, including all costs, matching the price from Canada and Russia,” Veloso said.

But Verde Potash’s material has several critical advantages over imported material; the project’s proximity and shorter delivery times to the Cerrado agricultural heartlands being the most essential benefit, Veloso argued.

“Also it’s worth remembering that imported material suffers the problem of granules being ground into dust and fines each time it’s shifted in the transportation process,” Veloso said.

“Most farmers’ equipment is designed to spread the granules over some distance; well this won’t work if you have dust and fines. A farmer wants a 100% granular product if he can get it,” Verde Potash VP corporate development Jaret Anderson told Mining Weekly Online in the same interview.

Verde Potash is close to signing an off-take agreement, Veloso added. “Brazilian blenders are keen, especially when you consider that their waiting times for imported material can last, on average, between three and four months. This has massive capital implications for them.”

For Veloso, a key principal was “batalhador”, the Portuguese for someone who battles onwards, getting things done. Certainly this seems applicable across Brazil’s domestic potash and phosphate industry that is now on the cusp of great and radical change.

Edited by Henry Lazenby
Creamer Media Deputy Editor: North America

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