Verde to expand potash output in Brazil to counter supply disruption

Roberto Samora
Thu, March 3, 2022

By Roberto Samora

SAO PAULO, March 3 (Reuters) - Verde Agritech PLC has decided to expand its potash production in Brazil as the global fertilizer supply chain faces a major bottleneck owing to the Russia-Ukraine conflict and Western sanctions on Belarus, an important producer.

The company said its board has approved accelerated investment so it can boost output capacity and become Brazil's largest potash producer.

Verde expects to double capacity of its second production facility in the state of Minas Gerais, currently under construction, and reach 3 million tonnes of output capacity in 2022. Plant 2 - as the venture is called - is on track to start production in the third quarter of 2022 with initial capacity of 1.2 million tonnes a year, Verde said, while the expanded production capacity is expected to be set by early fourth quarter.

"Given the latest sanctions applied to Belarus and Russia, we are acutely aware of the collateral impact on Brazil's agriculture in the case of a potash supply disruption," Verde President and Chief Executive Cristiano Veloso said. "We are equally worried about a global food shortage, which might be unavoidable if there is a breakdown in fertilizer supply."

Brazil imports about 85% of its fertilizer consumption, including potash.

Brazil Agriculture Minister Tereza Cristina Dias on Wednesday said the country has fertilizer stocks that should last until October and would soon launch a national plan to stimulate investments in potash and phosphorus mines.

Verde said its board approved an expenditure of 51 million reais ($10.04 million) to fund the expansion plan, up from the 22 million reais previously approved for the construction of Plant 2.

The company also expects to start building its Plant 3 unit in 2023, but such a move still requires permits. ($1 = 5.0794 reais) (Reporting by Roberto Samora; Writing by Gabriel Araujo; Editing by David Goodman and Mark Porter)