Itafos
Photo by: MBAC Fertilizer
TORONTO (miningweekly.com) – Canadian fertiliser producer MBAC Fertiliser Corp on Monday witnessed a rising share price on the TSX after the company announced that it planned to significantly lift output from its flagship Itafόs Arraias operations, in Brazil, over the next three years, on the back of strong demand and higher prices.
The Toronto-based firm said that it expected 2014 single super phosphate (SSP) output to range between 345 000 t and 375 000 t. In 2015, SSP output would rise to between 445 000 t and 475 000 t and in 2016, output would range between 470 000 t and 500 000 t.
MBAC’s Itafós operation is the first large-scale fertiliser producer in Brazil’s agricultural Cerrado area and the operation was expected to bring significant benefits for local farmers by supplying quality fertiliser with reduced logistics costs, as well as benefits to the community it serves with the attendant additional jobs, social programmes and infrastructure.
The operations comprise a sulphuric acid plant, the SSP plant and the granulation plant, and sales started in July last year. With recent modifications and improvements late last year and early this year, all plants had been able to perform at or close to their design capacity.
MBAC said it had started to witness strength in both demand and price in the local markets for SSP since the start of the year, consistent with developments in markets outside Brazil.
Global phosphate fertiliser prices had started to rise after a three-year decline. diammonium phosphate prices (FOB Morocco) had increased by about 20% since bottoming in November.
Triple super phosphate (TSP) prices had also seen a strong increase of about 32% since hitting five-year lows late last year.
“The impact of the rising price environment is starting to impact SSP prices in Brazil as 2013 inventories are depleting. The company believes that SSP prices should fully benefit from the rising global prices as the sales season starts to gain momentum,” it said in a statement.
Average selling prices for SSP are expected to be consistent with last year’s average selling price and are expected to rise driven mainly by an expected general recovery for international phosphate prices.
The cost of SSP production were expected to remain consistent and to fall over the next two years as the plant reaches nominal capacity.
MBAC said that since the start of January through mid-February, the company had received firm commitments for about 25% of its expected sales for 2014.
This level of sales would be more than what was previously budgeted for.
“The market tone seems much more positive than experienced in the last half of 2013 and this is consistent with the developments that we are seeing in the global markets. I am particularly excited about the potential for unlocking value at both the Itafόs operations, as well as the high grade Santana phosphate project,” said president and CEO Cristiano Melcher, who assumed his current positions at the start of the month.
MBAC said it had started detailed engineering work for the $426.7-million Santana phosphate project, in Brazil’s Para state, and continued to advance its financing discussions with various parties. It was looking for a strategic partner for a minority interest in the project as an alternative to financing its portion of the project.
The company also on Monday announced that it had appointed Nelson Canato Jr to the position of VP for operations. Reporting to the CEO, he would oversee the company’s operations, with an initial focus of accelerating the ramp up of Itafόs.
MBAC shares rose 9.09% on the TSX on Monday, to C$1.08 apiece.