For those of you asking how to play Brazil without direct investment, this stock is
a thumbs up from me, but keep in mind, I have done zero due diligence.
Just some consults on the fertilizer trends.
Many want to own SLC, Adecoagro or Brasil Agro. Those are all valid,
but they subject to the ag cycle, weather, and currency markets.
If Peter Zeihan is correct, ;>), and Brazil will not produce in the future due to
lack of resources, this stock should be priceless in time.
This is not a short term trade- it is more of a 5-10 year play, but
you would be in at the bottom, and a nice "liquid" way to play the
Brazil ag boom- that has already happened and they need the fertilizer
forever.
That is the great conundrum of Brazil pioneers. It attracts the entrepreneur,
the visionary, but due to the amount of capital and the time it takes to
implement a new project, the first try tends to fail or the ram rod tends to
die before the project gets going. Thus, it is the 2nd generation that flourishes
from the vision of the original pioneer.
Mastery of the Language and cultural finesse are paramount.
One needs to think of Brazil in 30 year blocks of time.
In the first 7-14 years, one tends to get whipsawed to death until
they find their sea legs and adapt to local cultures and economic/political
vicissitudes.
These projects are winners. It will depend on who is still alive to reap
the benefits albeit in 5 years or 30??
Kory
** If I were 25-30 years old in the States/Europe, I would be "all in" on these stocks.
If I were 60, I would say fuck it. Enjoy Brazil, do not invest in it. It is the 60 year olds that
have the capital to invest in Brazil, but if one invests at the wrong time, it tends to be
about 14 years before one can work his way out of the problem. Time tends not to
be on your side at 60+.
We have seen these types of boom/busts in the sugarcane, oil, and ag sectors over the
past 50 years.
What does Brazil Potash need to do to invest US$2.5 billion and produce fertilizers in the Amazon?
In an exclusive interview with AgFeed, Adriano Espeschit, president of Potássio do Brasil, a subsidiary of the company listed in New York, talks about recent contracts to advance the Autazes project and considers a future dual listing on the Brazilian stock exchange
11/04/2025
Projection of what the future Brazil Potash mine in Audazes (AM) will look like
In the fertilizer market, everyone knows that Brazil is highly dependent on imports of raw materials. And when it comes to a specific nutrient, potassium, the share that comes from abroad is more worrying: 95% of imports.
To produce more within Brazil, the starting point is to have deposits to explore, something that was discovered in the 1970s. When Petrobras was researching oil and gas in the Amazon basin, it identified potassium mines in the region.
Mining engineer Adriano Espeschit followed the story closely, worked in different companies in the sector and was on the project that tried to buy two assets in the region from Petrobras, but without success.
It was then that Canadian businessman Stan Bharti, born in India, decided to invest in potassium exploration in the area, starting “from scratch,” as Espeschit told AgFeed.
Today he is the president of Potássio do Brasil, a subsidiary of Brazil Potash, a company
officially created in 2009, its shares have been traded on the New York Stock Exchange since November of last year.
“The ore is 800, a thousand meters deep and you have to go there to confirm that. So, just to drill a thousand-meter-deep exploration hole, you spend around 2 million dollars. We drilled 60, so 120 million dollars have already been invested just in drilling the wells,” said Adriano.
Of the 60 wells, 43 were in Autazes, a municipality in Amazonas, where Brazil Potash's main project is currently being developed.
In recent years, there have been several battles to make the project a reality. The company says that US$250 million has already been invested. The total project, however, foresees investments of more than US$2.5 billion.
According to the executive, the expenses were for engineering, land acquisition, environmental licensing and legal issues.
The biggest challenge was facing questions from NGOs and the Public Prosecutor's Office about environmental and social impacts. The argument was that the project would be in an indigenous area.
After many court cases, with the support of the federal government and a position taken by Ibama itself, it was understood that the state agency, IPAAM, the Amazonas Environmental Protection Institute, would be responsible for granting the license. The authorizations have already been granted, according to Potássio do Brasil.
“The claim is so bad that, if it were on indigenous lands, it would have to have authorization or regulation from the National Congress in accordance with the 1988 Constitution. In terms of the State, IBAMA and IPAAM, which are the two environmental agencies involved, it was clear that it was not on indigenous land, so it was state land,” he stated.
In January 2025, Potássio do Brasil signed a Preliminary Cooperation Agreement with the Mura Indigenous Council (CIM) of Autazes. The agreement establishes an initial framework for collaboration between the project and the Mura indigenous communities, including a sustainable development program, as well as investments in social and cultural initiatives for the villages.
In May 2024, the Federal Public Prosecutor's Office filed a lawsuit to suspend the licensing of the potassium mine, arguing that the prior consultation with the Mura was not carried out properly and that the licensing should be conducted by IBAMA, which ended up not happening.
Espeschit says that he holds regular meetings with the community and that, when the project was approved, 32 of the 34 villages were present, reaching 90% approval, but the debate still generates controversy among the entities that oppose the exploration of the mine.
Now, the company says it has passed the preliminary licensing stage, and has therefore begun the installation of the project. “We are already starting the work to be able to install the mine, the plant, the road and the port”. AgFeed has learned that the details of the contract, which has already been signed, with the partner who will carry out the work to remove all the animals from the land should be released in the next few days. With the green light for the removal of the fauna and the suppression of vegetation, the company is moving forward with the excavation and installation phase of two deep wells on the site. “We will soon announce some contract signings with service providers who will be installing machinery there in the field, with their feet on the ground”, he says. The company that has just been hired has 10 employees on site, which, at the beginning, adds up to around 50 people. “During the work, we will have an average of 2,600 employees working there and will reach a peak of 4,000”, he estimates. The Autazes project foresees the production of 2.2 million tons of potassium. The shareholders have already indicated that, in the future, there may be a “second phase”, of expansion to other locations, which would lead to a volume of 5 million tons.
The start of production is scheduled for 2029 or 2030. This year “is more of a preparation year” according to Espeschit, when “the ship’s maneuvers” are being carried out. For 2026, he foresees full capacity in terms of implementation, when there will already be 2.6 thousand employees on the project.
Brazil currently consumes around 14 million tons of potassium. The product is imported mainly from Canada, Russia, Belarus, Germany and Israel.
“Excluding the 2.2 million tons that we will produce made in Brazil, we will reduce this dependence to around 80%”, he states.
If new projects are implemented in the areas already mapped, compatible with Autazes, it would be possible to reduce imports to 40%. “The National Fertilizer Plan (led by the government) sets a target for 2050, a reduction to 50%”, he says.
The company guarantees that it will be able to offer potassium at very competitive prices. “Our cost delivered to Mato Grosso is lower than just the logistics cost to bring it from Canada to Brazil”. Furthermore, the much faster delivery of fertilizer to rural producers is considered a differential. “They will no longer have to make a purchase more than 100 days in advance, which is the average time it takes when they place a purchase order to receive potassium on their farm.” At Potássio do Brasil, it would be possible to receive it “in 5 days or less,” he promises. The company would also benefit from less interference from exchange rate fluctuations, which tend to be important in price formation since almost all potassium is imported. Current challenges When asked about the factors that could still “hold back” the project’s progress, the president of Potássio do Brasil said that they are physical and financial issues. In other words, it is necessary to have qualified people to work on site and also have resources that make implementation viable. In any case, he guarantees that exploring and producing potassium in the Amazon is now a real thing and will happen. Until a few years ago, some analysts considered this possibility a “utopia” due to the strong resistance, mainly from environmental NGOs, and also due to the high costs involved.
“We are producing the greenest potassium in the world, focused on food security in Brazil and the world, and we want anything that could be a question to be raised so that we can analyze it and find a better way to do it,” he emphasizes. The executive points out that a large part of the potassium produced in other countries – and imported from Brazil – leads to an additional 1.2 million tons of carbon equivalent, because it is a process that uses coal as an energy source.
Espeschit says that, over the last few years, several details of the project have been revisited, following suggestions that were made. One example of this is the fact that, in the original project, there would be water capture from the Amazon aquifers, which are underground rivers.
“The environmental agency demonstrated that it would be more viable to capture water from the Madeira River itself. This will cost more than the wells, but we implemented what the environmental agency suggested to adapt”.
The financial challenge remains. Espeschit told AgFeed that around 70% of the US$2.5 billion will come from financing, in talks that are taking place with several credit institutions, including BNDES itself. Another part will come from equity. Brazil Potash, the controlling company of Potássio do Brasil, carried out an IPO on the New York Stock Exchange (NYSE) last year, which enabled the raising of US$30 million. The choice of the New York Stock Exchange was reportedly due to the strong mining market and a more traditional capital market. According to the executive, a follow-on in the US should be done “probably by next year” and new strategies, including on the Brazilian stock exchange, are not ruled out. “You can do what the market calls dual listing, that is, list on more than one stock exchange. And this is in our strategic planning as an alternative. So we can list both here in Brazil and on other stock exchanges around the world, such as, for example, the Toronto stock exchange. But nothing prevents us from also listing in London or Sydney, Australia,” he explained, highlighting that these countries are prominent in the mining market. Although the company reinforces its optimism, its shares in New York have accumulated a strong devaluation of more than 80% since the IPO. Brazil Potash shares were trading at around US$2.30 this Thursday, April 10, while in November 2024 they were worth more than US$13.
“This is common in stock market launches, especially when a project has been in existence for 15 years and you have investors who have entered capital calls with very low amounts,” explained the president. He also warns that the volumes traded are insignificant, which contributes to creating a certain “mask.”
He emphasizes that, in any case, he remains “very optimistic” about what he calls the “ship leaving the port,” with the start of activities at the site. “We will see this and the expectation is that whoever sold, sold wrong.”
For this year, with actions such as those related to fauna and flora, legal issues and the start of some works, in addition to archaeological mapping, investments of US$10 million are planned.
By 2026, the necessary investments should be between US$400 million and US$500 million, due to equipment that is starting to be purchased, according to Espeschit.
The funds are still being raised and will continue to be raised in stages. He says that imported equipment, for example, could be financed by a credit agency in the manufacturing country. The same applies to demands from Brazil, which, depending on the case, could even access Finame, from BNDES.
To attract investors, Potássio do Brasil is counting not only on its “thesis” that Brazil could become self-sufficient in potassium in the future or even an exporter of the fertilizer, but also on some contracts that have already been signed.
One of the agreements was made with the grain giant Amaggi, which will be able to buy 500 thousand tons of potash from Brazil Potash annually, over the course of 17 years. At the same time, Stan Bharti's company would use river transportation from Hermasa, which belongs to the Maggi family group.
“And we have a third agreement where they (Amaggi) could sell amounts above the 500 thousand tons that we closed with them”, revealed Espeschit.
Calculations made by the CRU consultancy, which specializes in fertilizers, indicate that Potássio do Brasil could generate an EBITDA of US$ 1 billion when it is operating at full capacity, between 2031 and 2032.
These figures may change, also depending on international geopolitical conditions that tend to influence fertilizer prices. Problems related to Belarus and the conflict between Russia and Ukraine have helped to cause price spikes in recent years.
Market analysts have also questioned the quality of the deposits in the region where the Potássio do Brasil project was installed, alleging a lower concentration of the nutrient, for example.
The company's CEO guarantees that this is yet another case of “fake news”. “There is no such thing, the product is standard, you only enter the market with the product if you meet a minimum specification”. “Our product has 95% KCL and our ore, our raw material, has an average content of 30%. You enrich it in a beneficiation plant to reach that 95%,” he added. According to the company, potash from Canada, for example, would have the same content, at 30%.
