TORONTO (miningweekly.com) – Brazil-focused fertiliser producer MBAC Fertilizer this week announced that it had restarted continuous single super phosphate (SSP) production at its Itafós operations, in Brazil, after receiving funds from the Santander working capital facility at the end of August.

MBAC last month reported that it had successfully reprofiled its debt obligations and secured an $18.2-million working capital loan to address its liquidity position.

The TSX-listed company had been struggling with lower-than-expected working capital levels, restricting it to buy consumables and spare parts, which caused interruptions, delays and operational inefficiencies with SSP production.

These setbacks climaxed in a slower-than-expected ramp-up and reduced output at its flagship Itafós mine, resulting in the company being unable to declare commercial production during the second quarter as planned.

MBAC in July last year started SSP powder production at its Itafós Arraias project, becoming the first large-scale fertiliser producer in the agricultural Cerrado area.

Output up to September 7 reached 4 140 t of SSP and 3 264 t of sulphuric acid, following a period in which all plants had been operating well below capacity, pending working capital for raw materials and spare parts. All four plants (beneficiation, sulphuric acid, acidulation and granulation) had now demonstrated that they could operate at expected levels for commercial production and as designed, the company said.

“MBAC management believes that with the restocking of raw materials and critical spare parts, the company is now in a position to achieve commercial production rates in the coming weeks. The commercial production rate is equivalent to a monthly production volume of 25 000 t of SSP or about 60% of nominal capacity,” the company said on Tuesday.

MBAC also noted that it would implement a set of comprehensive cost-containment initiatives. The restructuring, which included reducing MBAC's workforce by more than 15% by eliminating several positions in Toronto, Rio and Arraias, renegotiating agreements with suppliers and using equipment and office facilities more efficiently, was expected to generate yearly savings of about $4-million.

"Although our primary efforts are focused on the ramping up of production, streamlining costs and positioning MBAC as the phosphate supplier of choice in Brazil's agricultural heartland, we also continue to explore several strategic and financing options,” MBAC president and CEO Cristiano Melcher stated.

The company expected to incur one-off charges for the restructuring in the current quarter of about $1.5-million.