The cost of producing potash from a mine under development in the Brazilian Amazon will be similar to that in Russia and lower than that of the world’s top producer, Canada, the CEO of Brazil Potash Corp said, citing a third-party assessment used in a company presentation.
The economic viability of the project — which faced a lengthy licensing process, involving several government agencies and indigenous consultations — caught the attention of analysts after the price of potash fell drastically from levels above $1,000 per metric ton, amid threat of sanctions against Russia and Belarus in 2022, to just over 300 dollars currently.
That and new mining projects popping up in Canada and Laos will likely keep prices in check, they said.
“In total, our cost to mine, process and deliver the potash to farmers in the State of Mato Grosso will be $130 per ton,” CEO Matt Simpson said in an interview on Monday, indicating the cost of production in Brazil at 80 dollars per ton and transportation at 50 dollars per ton.
According to another price assessment, which does not guide the company’s business, the cost of extraction from Russia is estimated at $50 and that from Canada at $80, Simpson said. By this assessment, Brazil would be less competitive than Russia in “in line” with Canada.
Brazil depends on imports for almost 100% of its potash supplies, which come from countries such as Canada and Russia.
Simpson noted that the freight tied to potash imports alone is greater than the total cost for the company, whose mine is significantly closer to local producers.
In a presentation sent to Reuters, the company’s potash price in Brazil was forecast at $459 on a cost and freight (CFR) basis, which seemed high to analysts who spoke to Reuters.
Simpson said this projection should be understood as an average over the life of the mine, conservatively calculated at 23 years. He also cited 15 million tonnes of additional global demand for potash over the next eight years.
“There will be a deficit of six to seven million tons in new supply in relation to demand, which will cause a structural increase of approximately 100 dollars per ton,” he said, predicting that the price of potash in Brazil could be 400 or 500 dollars by 2032.
Brazil Potash intends to produce 2.4 million tons per year, one fifth of national demand, and will have Mato Grosso producers as its main customers.
The company also hopes to make direct sales, eliminating mixers, which Simpson said charge buyers premiums of $50 to $70.
Production at the Amazon mine, which has four of the 11 permits needed to complete construction, is scheduled to begin in 2029, Simpson said.
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