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Tuesday, 5 March 2013
Verde Potash: Brazilian appetite will help firm, says Ocean Equities
Brazil's appetite for potash will help Toronto-listed Verde Potash as it comes online, says Ocean Equities.
The firm will beome one of Brazil's only publically listed domestic potash suppliers with a "vast" mineral resource, notes analyst Adam Lucas.
The company is advancing the Cerrado Verde project and yesterday said it expected to conclude off-take negotiations for its flagship project in Brazil during the second quarter of this year.
The project comprises an indicated resource of 71 million tonnes with an average grade of 9.22% potassium and an inferred resource of 2.76 billion tonnes at 8.91%.
Yesterday, according to ANDA, Brazil’s national fertilizer association, potash consumption in the country increased 9.3% in 2012.
Brazil in fact bucked the worldwide trend as global consumption of potash declined.
The country, however, imported 7.5mln tonnes of potash last year which was 93% of its consumption, with the bulk of these imports taking up to four months to be transported.
Verde says its proposed mine is well positioned to address Brazil's chronic potash deficit, as it is just four hours away from Uberaba, a fertilizer blending district which accounted for 500,000 tonnes of Brazil’s potash consumption last year.
"The next few months will be busy for Verde as the company finalises agreements for the feasibility study. Due to the control of global potash from the two giants, Canpotex and the Belarusian Potash Company, it shouldn’t be a problem for Verde agreeing an attractive off-take contract with one of the many fertiliser blenders in the Minas Gerais State of Brazil as they look to withdraw from relying on a single, often delayed, supply of granular KCl," said Lucas.