Verde Agritech announces US$54 million in third potash unit to expand supply to Brazil

RIO DE JANEIRO, BRAZIL – On May 16, Verde Agritech announced it will invest R$275 million (US$54 million) to build, as of 2023, the third chlorine-free potash production unit in Brazil, as fertilizer raw material prices are on the rise.

With the new plant, the company will be able to produce up to 16.4% of the national demand for potash by 2024, Verde said.

The company has already invested more than R$500 million in recent years to produce chlorine-free potash in Minas Gerais state.

“The capex for Plant 3 is expected to be covered by the accumulated cash flow generated by sales through the second quarter of 2023, with no need for equity or debt financing,” the company said of the source of the funds.

The Brazilian company announced new potash production targets earlier this month, which indicates the company could more than double volumes in 2022 from last year and then double extraction again in 2023.

The document published today does not cite guidance.

The company, which closed 2021 with a production of about 400,000 tons, previously forecast 1 million tons for 2022, up 300,000 tons from the guidance at the beginning of the year. For 2023, it would be 2 million tons.

Verde’s project contemplates other investment phases and could reach 60% of all the potassium Brazil needs, the company reinforced.

Currently, more than 96% of the KLC (potassium chloride) used in Brazilian crops comes from abroad, mainly Canada, Russia, and Belarus, but the war in Ukraine has raised prices due to supply concerns.

“The risk of dependence on imported products and the search for more sustainable sources for food production have caused Brazilian farmers to seek safer and financially viable alternatives to ensure production,” noted the founder of Verde Agritech, Cristiano Veloso.

The Verde fertilizer also has other nutrients in its composition besides potassium.

Because it is produced in Brazil, the product placed inside the farm costs 10% less than the KCL, said the company.

Unlike the imported product, the potassium produced by the company in São Gotardo and Matutina, in Minas Gerais, is chlorine-free, which improves soil microbiota. But it also has a lower potassium concentration than KCL.

Verde Agritech’s product currently fertilizes more than one million hectares by more than 5,000 farmers.

With information from Reuters

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