What's next for Brazil's US$2.5bn Autazes potash project

Brazil’s Amazonas state earlier this month approved the installation license for Potássio do Brasil's US$2.5bn Autazes potash project.

Potássio do Brasil is controlled by Brazil Potash, whose CEO, Matt Simpson, explains the project's next steps in this email interview.

BNamericas: With the installation license obtained, what are the next steps for the company in developing the project?

Simpson: The signing of additional offtake agreements, beyond the current one signed with Amaggi Group, to have ~2Mt/y out of our total planned 2.2Mt/y under long-term take or pay contracts at market prices.

Working with the Mura indigenous people [who live in the Autazes region] to jointly develop a “good living project.”

Completion of an upcoming financing with the main use of proceeds to fund the start of project construction. And the start of project construction.

BNamericas: What licenses are still required?

Simpson: Installation licenses are required for the other parts of the project such as port construction, road construction, water usage, etc.

Upon the completion of construction, Brazil Potash will need to obtain the operating license.

BNamericas: What will Potássio do Brasil need to develop the project, in terms of services, machines and equipment to contract, in the short and medium term?

Simpson: The construction of the Autazes potash project will entail a large number of companies.

[Regarding services] mainly hiring of a lead EPCM – engineering, procurement and construction management – company for the overall project who will then manage various subcontractors that have expertise in areas such as mine shaft sinking, process plant construction, power line construction, port construction, etc.

This can be broken out into three main areas being: mine – hoist, underground continuous mining machines, etc.; process plant – crushers, ball mills, crystallizers, compactors, etc; and port – including trucks to transport ore ~13km from plant to port.

The short-term focus is on mine shaft sinking followed by port and power line. The medium-term [focus] is construction of the processing plant and dry stacked tailings facility.

BNamericas: When does the company expect to start production and what will be the project's production capacity?

Simpson: Construction is expected to start later this year and will take just over four years to complete.

The plan is to produce 2.4Mt/y of granular potash (MOP) for sale to Brazilian farmers using the inland rivers as the main means of product transportation to customers.

BNamericas: How important is the Autazes project and which market will the production serve?

Simpson: The Autazes potash project is a very important contributor to ensuring global food security, as I’ll explain.

Brazil is one of the world’s largest exporters of agricultural goods at US$110bn per year, [it has] has one of the highest amounts of arable land suitable to grow food, highest amount of fresh water, year-round climate conducive to growing food and extensive farming know-how.

However, Brazil’s agricultural sector is exposed as it is the world’s largest importer of potash at 13.8Mt/y and this is growing at 6.8% per year which is roughly twice the rest of the world, according to UK market intelligence firm CRU.

Brazil imports 98% of its potash, as there is only one domestic producer owned by Mosaic, half of which comes from countries at wars [Russia/Ukraine, Israel conflict with Hamas] or sanctioned [Belarus] when potentially one of the world’s largest potash deposits is located in its own backyard being developed by Brazil Potash.

By having a domestic secure supply of potash, it ensures Brazilian farmers are able to access this critical fertilizer to more efficiently grow food to feed our ever-growing global population.

BNamericas: Of the total amount announced to be invested, US$2.5bn, how much has already been disbursed and what is the disbursement schedule for this and the next few years?

Simpson: Brazil Potash has invested US$238mn advancing the Autazes project to its current construction permitted state along with work conducted on our three other potash discoveries in the Amazon potash basin.

The company is currently raising the US$2.5bn to construct the Autazes project out of which US$1.7bn will be debt and the balance equity or equity like (e.g. royalty).

Funds will be disbursed in a bell curve shape over the project’s construction – less at the start and end with the bulk of spending in the second and third year of construction.

Brazil Potash is raising funds from international investors, export credit agencies and major banks.