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Centaurus embarks on potash growth strategy with new JV

17th June 2016

By: Creamer Media Reporter

  

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JOHANNESBURG (miningweekly.com) – Formerly Brazil-only iron-ore company Centaurus Metals is continuing its diversification strategy and has now, in addition to copper and gold, also added potash to its portfolio.

The ASX-listed company announced on Friday that it would embark on a 50:50 joint venture (JV) with Tavarua International, a private investment company controlled by shareholder Ingo Wendeb, to investigate potash opportunities in Australia and South East Asia.

Tavarua would provide the newly established JV vehicle, Nova Potash, with initial capital of $190 000, while Centaurus would manage the JV.

Over the past four years Wender had been working with Brazilian agricultural research institute, Embrapa, to identify a solution for the low-cost delivery of potash fertilisers to the extensive Cerrado agricultural region of central Brazil.

This database of information held by Tavarua was generated from resource development work undertaken by Wender on his various potash tenements in Brazil and the various Embrapa agronomical studies.

Under the arrangements, the new JV would use the geological, ore processing, product characterisation and agronomical knowledge base and data to assess the opportunity to achieve a similar low-cost delivery of potash fertiliser for the Australian and South East Asian markets – where yearly demand for potash fertilisers was currently over five-million tonnes.

Centaurus reported that global demand for potash was forecast to grow substantially, citing global population growth of 200 000 people a day. This would require an extra 40 000 ha of arable land, but with limitations on land available for farming, farmers were increasingly turning to fertilisers to improve the yields from existing land.

Citing the United Nations’ Food and Agricultural Organisation, Centaurus said that about 80% of future growth in crop production would come from yield advancements. Of the factors that affected crop yields it had been estimated that about 50% of the impact was owing to fertiliser.
 
Centaurus MD Darren Gordon said the new JV with Tavarua provided an exciting and unique new growth opportunity for the company, leveraging off the significant amount of information already developed by Tavarua in Brazil.

“Worldwide population growth is making food supply and security ever more important and the key to this is the increasing use of fertilisers to enhance agricultural yields,” he said.

“The Australian and South East Asian markets collectively represent very strong growth markets for potash fertiliser consumption – and Centaurus has a highly experienced exploration team that will draw on Tavarua’s successful exploration work in Brazil to identify suitable project opportunities in the region.

“With the financial support and technical knowledge of the Tavarua team, we believe that Nova Potash can identify potash projects that will allow the company to grow strongly in the potash sector.”

The opportunity created by the newly established JV with Tavarua came at a time when Centaurus was also about to start diamond drilling activities at its 100%-owned Mombuca gold project, in Brazil.

“With the company’s diversification plan now well advanced – both in and outside of Brazil – we are looking forward to delivering results on a number of fronts and driving value for shareholders,” Gordon said.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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