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MBAC Fertilizer reports robust economics for Brazil project

17th October 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – TSX-listed MBAC Fertilizer on Thursday reported positive results from a feasibility study for the Santana phosphate project, located in Brazil’s Para state, attaching an after-tax net present value of $396-million to the project, which was slated to cost about $426.7-million to build.

The high-grade phosphate fertiliser project is located in the heartland of one of South America’s rising agricultural areas, providing it with a significant geographical advantage to other suppliers of the critical crop nutrient. 

Brazil is the world's largest exporter of beef, chicken, soybeans, sugar, ethanol, orange juice and coffee and relies heavily on imported fertiliser to enrich its large and often nutrient-weak farmlands.

Santana is expected to produce about 500 000 t/y of granulated single super phosphate (SSP), which the study says would be sold at about $345/t in 2016, which would be the project’s first year of operations.

The Santana project was expected to produce an after-tax internal rate of return of 19.9%, with a capital payback period of five years.

Operating costs were pegged at about $113/t from 2017, and over the project’s 32-year mine life.

The project currently holds a National Instrument 43-101-compliant reserve of 45.5-million tonnes, grading on average 12.9% phosphorous pentoxide at a 3% cutoff.

Brazil is currently dependent on importing about 67% of its fertiliser needs from abroad and, with the agriculture industry estimated to grow by about 5% yearly, the need for fertiliser imports would only widen the market, even when taking into account new fertiliser plants expected to start operating in the future.

Brazil’s government had set a target to become ‘fertiliser independent’ by 2020.

MBAC in July started SSP powder production at its Itafós Arraias project, also in Brazil, becoming the first large-scale fertiliser producer in Brazil's largest agricultural market, 'the Cerrado'.

TSX-listed Verde Potash is developing the largest potash mine in the country, the Cerrado Verde project, located in the Cerrado, in the state of Minas Gerais.

Brazilian mining company Vale would also likely start output from the $4-billion Carnalita potash project, in Brazil's north-eastern Sergipe state, by 2017, which would help make up for the cancellation of the Rio Colorado project, in Argentina, and for the nearly depleted Taquari-Vassouras deposit in Brazil.

Edited by Creamer Media Reporter

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