Brazil Potash Raises $30M in U.S. IPO to Produce Fertilizer in the Amazon
Its initial public offering included two million shares priced at $15.00 each, raising $30 million
A Canadian company mining a key fertilizer for grain crops in Brazil’s Amazon region is set to have its shares traded in the U.S. starting on Wednesday.
Toronto-based Brazil Potash GRO -7.40%decrease; red down pointing triangle shares will trade on the New York Stock Exchange at $15 each, the company’s Chief Executive Matt Simpson said after the company raised $30 million selling 2 million shares late Tuesday.
Brazil Potash plans to extract potash, an important nutrient for plants, from deep under the Amazon soil.
Extraction is set to start by 2029 after an extended licensing process, Simpson said. The mine is located near Brazil’s farm belt and will supply a major global breadbasket.
“It is going to be massive for global food security,” he said.
Brazil Potash is spending $2.5 billion on construction costs. The company expects to extract 2.2 million metric tons a year.
The company had around $405,000 in cash as of October, it said in a regulatory filing with the Securities and Exchange Commission. Working capital was around $4.3 million, with liabilities of $5.5 million. Brazil Potash expected to use part of the IPO proceeds to pay off debt and anticipated spending approximately $25.5 million in the next 12 months.
Simpson said the mining operation is located in an area covered by pastures and won’t cut into the Amazon rainforest, a major carbon-dioxide sink. Mining will happen underground, “with a very small footprint on the surface,” he said.
Brazil Potash’s mine is near the town of Autazes, in the southeastern part of the state of Amazonas, which is twice as large as Texas. The location is close to waterways and roads already used by grain exporters moving their cargo toward sea ports via trucks and river barges, Simpson said.
“Instead of those barges coming back empty we are going to load them with our potash and just reverse the route,” curbing the operation’s carbon footprint, he said.
The operation’s entire production is expected to be sold domestically. Brazil is a net importer of fertilizer.
According to government data, Brazilian importers paid more than $3.3 billion for 12.2 million tons of potash chloride this year through October. That compares with 11.2 million tons for $4.3 billion in the same period a year earlier.
Economic sanctions against potash exporters Russia and Belarus in 2022 pushed the commodity’s price higher, while increased production in the following year had the opposite effect, the U.S. Geological Survey reported in January.
A 2020 report published by Brazil’s government said that potash was the fertilizer local farmers used the most, and 94% of it was imported. Canada is one of the main sources, along with Russia, Israel and other countries.
Simpson said that trade restrictions threatened by President-elect Donald Trump in the U.S., and potential retaliation from trade partners, are likely to increase Brazil’s role as a global food supplier. That, in turn, would make locally produced fertilizers more valuable.
“Those kinds of actions by the new administration could even further reinforce the importance of this project,” he said.
The operation is connected to Brazil’s national power grid, which is about 85% renewable energy.
Autazes has one of Brazil’s largest reserves of sylvinite, the mineral from which potash is extracted, according to the Brazilian Mining Association.
Mosaic Co., headquartered in Tampa, Fla., and Singapore’s Verde AgriTech, also produce potash in Brazil.