* Project holds 500 mln tonnes of potash resource
* A quarter of resource seen as commercially viable
* Up to $1 bln stock sale planned to finance mine
By Sabrina Lorenzi
RIO DE JANEIRO, March 22 A Brazilian fertilizer
deposit owned by Canada's Brazil Potash Corp has potash reserves
equal to at least 18 years of Brazil's potassium-fertilizer
needs, a source with direct knowledge of the project told
The mine project has total potassium reserves of about 500
million tonnes of which at least 125 million, or a quarter, is
made up of at least 25 percent potassium chloride, a high-enough
grade for commercial production, the source said. He added that
the grade estimate was "conservative."
Toronto-based Brazil Potash, whose investors include
Canadian merchant bank Forbes & Manhattan as well as Australian
investors, hopes to begin production at the site near Autazes,
Brazil in the state of Amazonas in 2017 or 2018, according to
the source, who declined to be named because he is not
authorized to speak to the press.
The Brazil Potash asset is one of several potential potash
projects in a 400 kilometer (250 mile) potash belt south of the
Amazon river. Brazil's mines and energy ministry believes the
region could produce enough potash to eventually make Brazil one
of the world's largest producers.
"If we had a plant we could supply the whole country with
potash for 100 years," said Daniel Nava, mining secretary of
The Brazil Potash project is expected to cost $2 billion to
$3.5 billion to build and Brazil Potash hopes to sell as much as
$1 billion of stock in its Brazil-based Potássio do Brasil
operating unit in the next year to help finance construction,
the source said.
Depending on financing, the mine, close to the Madeira
River, a major Amazon tributary, could produce between 2 million
to 4 million tonnes a year, the source said. Brazil Potash
officials declined to make an official comment on the estimates.
Such a mine could make up for some of the supply from the $6
billion Rio Colorado potash mine project in neighboring
Argentina, which was suspended earlier this month by Brazilian
mining giant Vale SA. While environmental risks
exist, the Amazon region's rivers offer ways to move potash
cheaply to Brazil's farmers.
Brazil is the world's largest exporter of beef, coffee,
orange juice and sugar and is expected to overtake the U.S. as
No. 1 soybean exporter this year. It is highly dependent on
fertilizer imports and is pushing local companies to develop
mines at home or in neighboring countries.
Brazil's extensive soils are derived from mostly ancient
geological formations and lack high levels of the three main
plant nutrients: potassium, nitrogen and phosphorus.
Brazil uses about 7 million tonnes of potash a year to help
make up for this nutrient deficit.
Top quality potash reserves are rare. Much of the world's
supply comes from a handful of countries including Canada,
Belarus and Jordan. Arriving in ports on Brazil's southeast
coast, a large portion of Brazil's potash imports must be
trucked 1,500 kilometers (930 miles) or more to fertilize fields
in farming regions such as Mato Grosso state.
Brazil Potash and Potássio do Brasil, face hurdles before
production can start at the site. These include electrical
links, port and mine-waste facilities and environmental licenses
to build the mine and processing plants.
River navigation improvements would also be necessary to
transport the output downriver to ocean ports at Manaus or
Belem, Brazil on the Amazon River or to move the potash up the
Madeira River to highland farms in Brazil's Cerrado and Mato
Grosso soy belt.