Toronto-based potash junior Brazil Potash Corp., which is proposing to mine potash in Brazil’s northwestern Amazonas state (GM June 3, p. 31), announced on Oct. 3 that it has signed binding agreements with Amaggi Exportação e Importação Ltda. (Amaggi), one of the world’s largest privately held soybean producers.
The offtake would include take or pay for 500,000 mt/y, a marketing agreement to sell Brazil Potash’s remaining 1.9 million mt/y, and a barge transportation agreement to ship the initial planned 2.4 million mt of potash to inland ports close to major farming regions. Brazil Potash said its potash project is near construction ready.
In addition to being a soybean producer, Amaggi’s businesses include agricultural farming, commodities trading, logistics operations, and energy production, and its logistics subsidiary, Hermasa Navegação da Amazônia Ltda.
These contracts apply solely to Brazil Potash’s Phase One Autazes production of 2.4 million mt/y of potash for a 15-17 year term with a mutual option to extend. For the offtake and marketing agreement the potash sale price is based on the spot Brazil delivered price for granular potash (i.e., MOP CFR Brazil), plus inland freight savings minus a discount.
Once the project is operational, as part of the barge transportation agreement Hermasa will allocate the required assets and resources for the covered transportation of potash – primarily from Brazil Potash’s port near the village of Urucurituba on the Madeira River – to Hermasa’s port located at Porto Velho in the northwest state of Rondonia, or through the Amazonas and Tapajos’s rivers to other destinations.
“It’s game changing for Brazil Potash to sign binding contracts with Amaggi,” said Stan Bharti, Brazil Potash Chairman. “It is the ideal company for Brazil Potash to contract with as they consume a large amount of potash for application on their farmed land; they also have an extensive distribution and logistics network through their wholly owned subsidiary, Hermasa, which operates a barge-to-ocean vessel transshipment terminal only 40 miles upstream from our Autazes project. I have known Blairo Maggi for a number of years and am excited to be working with Amaggi and its talented team.”
“Brazil is a country rich in farming know-how with massive amounts of cultivated land, fresh water, and an ideal temperature to allow for year-round growing,” said Blairo Maggi, a shareholder in Amaggi. “However, despite being one of the world’s largest consumers of potash, globally, we are heavily exposed given that 98% of this essential plant nutrient is imported. Having a large-scale domestic source of conventional potash – as proposed by Brazil Potash – is important to help ensure both Brazil’s and global food security. I am therefore happy that Amaggi is able to be part of this important project.”