The first half of 2023 has been a whirlwind of activity for the management of Brazil Potash, and on June 5, 2023, the company provided a shareholder update. Notably, their efforts have garnered robust support from Brazil’s newly established federal government and considerable interest in the remaining potash offtake rights. The momentum was underscored by a keynote panel speech delivered at the International Fertilizer Association (IFA) annual conference.
The conference, attended by a crowd of over 1,500, included the top executives of major fertilizer companies worldwide. Among the distinguished participants was Matt Simpson, Brazil Potash’s CEO. His keynote address emphasized the significance of “building sustainable supply chains to ensure food security,” with particular emphasis on the concept of “selective globalization.” This suggests that domestic production of certain essential goods should be prioritized to guarantee supply availability.
Simpson’s remarks bear particular relevance to Brazil, a country recognized as one of the globe’s most prolific agricultural exporters, with an output exceeding US$110 billion per annum. Given its vast freshwater resources, fertile land, and a climate suited for year-round crop cultivation, Brazil’s role in global food security is set to expand in tandem with global population growth. However, it faces a vulnerability in importing over ~98% of its potash needs, primarily from Canada, Russia and Belarus, despite housing one of the world’s largest basins.
This message has resonated with Brazilian governmental bodies, as evidenced by recent public declarations of support from influential figures like Vice President Geraldo Alckmin, Governor of Amazonas Wilson Lima, and Mayor of Autazes Andreson Cavalcante. Their backing has catalyzed the progression of the licensing process, leading to a ruling by the President of Brazil’s Federal court (TRF-1) to reinstate Brazil Potash’s Preliminary (Social and Environmental) License. This is considered a crucial forward stride toward obtaining the Installation License required to commence project construction.
Simultaneously, Brazil Potash has been engaging in discussions with several esteemed companies to secure long-term take or pay contracts for an additional 1.5 million tonnes, with an eye on equity investment. This is part of their strategy to assure banks providing debt financing of credible counterparties interested in purchasing their potash and agreeing on price terms. The remaining 200,000 tonnes of annual production is projected to be reserved for spot sales, ensuring production flexibility.
Brazil Potash has also prioritized its Environment, Social, and Governance (ESG) strategy, a testament to which is the completion of work that can be reviewed on the Company’s website. Morgan Stanley Capital International (MSCI), a respected third party, reviewed and rated the company’s policies and actions, awarding them an ‘A’ rating. This places Brazil Potash in the top quartile of their producing peers, underscoring their commitment to leadership in this domain.
In the quest to drive the project’s development, Brazil Potash has been meticulously working towards forming a robust board of directors with industry and thought leaders. More information on this will be shared in future shareholder updates.
Even as Brazil Potash celebrates the progress of key initiatives, its focus remains unwavering on obtaining licensing and strengthening its community presence. The company is committed to contributing significantly to global food security and, crucially, delivering robust shareholder returns.