TORONTO (miningweekly.com) – Canadian fertiliser producer MBAC Fertiliser on Tuesday said that output from its flagship Itafόs Arraias operations, in Brazil, was ramping up on schedule to declare commercial production in the current quarter.

The Toronto-based project developer said that during the three months ended March 31, the company had witnessed substantial improvement in its management team and operations year to date and particularly in April, after it recently closed a $20.7-million equity financing that strengthened the company's working capital position.

Effective March 17, the company appointed Nelson Canato Jr as VP of operations to manage production facilities at Itafόs. After spending about a month reviewing the operations, Canato implemented several operational modifications that were improving the consistency of the Itafós operations.

In April, total output reached more than 21 000 t of single super phosphate (SSP), which represented the highest monthly production to date.

MBAC characterised the first quarter’s operations as reflecting early-stage ramp-up issues, as well as working capital constraints, which had subsequently been improved.

The company said that its sales efforts for 2014 were being advanced through negotiations with large fertiliser distributors, blenders, large farmers and grain traders within the region. MBAC reported having received firm purchase orders for about 115 000 t of SSP to date, a portion of which had been paid for in advance.

To satisfy market demand, the company is providing its customers with the ability to buy its SSP product in one-tonne bags in addition to the standard bulk delivery.

The company would also provide its customers with the ability to have micronutrients added to the SSP, providing a broader product offering. Each of these initiatives was expected to provide the company with additional margin.

MBAC said that in the long term, its production ramp-up and sales growth were supported by strong market fundamentals and trends in Brazil.

Fertilizer consumption had continued to be strong, driven by increased intensity of fertiliser application and increased planting area. Soybean prices are at relatively high levels, encouraging Brazilian farmers to increase crop yield through using fertilisers and other agricultural inputs.

Recent data from ANDA (the National Fertilizer Association in Brazil) showed that consumption of all fertilisers in Brazil for the first quarter was up by 10.6% when compared with the same quarter last year and imports of fertiliser were up by 31.3% over the same quarter last year. ANDA currently forecast fertiliser consumption in Brazil of 32.1-million tonnes in 2014 which would be yet another record year.

Despite growing overall fertiliser demand and consumption, ANDA forecast that Brazil's imports of SSP would decrease to about 400 000 t this year, down from about 870 000 t in 2013.

MBAC believed that this should lead to an improved competitive environment for its product in its target region. The decline in imports is consistent with Brazil's objective of reducing its dependence on imported fertiliser, given the strategic importance of fertiliser for Brazilian agriculture – one of the largest sectors in the Brazilian economy and one of the country's principal export engines.

The firm recently said that it expected 2014 SSP output to range between 345 000 t and 375 000 t. In 2015, SSP output would rise to between 445 000 t and 475 000 t and in 2016, output would range between 470 000 t and 500 000 t.