Brazil Potash, Amaggi sign offtake and marketing agreements for Amazon mines

By Ana Mano

SAO PAULO (Reuters) - Toronto-based Brazil Potash and Brazilian farm conglomerate Amaggi have signed agreements aimed at the purchase, sale and shipping of 2.4 million tonnes of potash that the Canadian company plans to mine in the Amazon, according to a joint statement on Monday.

Potash - a basic nutrient for plants - is an important ingredient in fertilizers.

Under the agreements, Amaggi will be legally required to buy 500,000 tonnes of potash per year from the Canadian miner for at least 15 years.

Amaggi will also have rights to market Brazil Potash's remainder 1.9 million tonnes of annual potash production to other buyers.

In addition, Amaggi's logistics arm will ship 2.4 million tonnes of annual potash production to Brazilian inland river ports connected to major farming regions.

Reuters previously reported Amaggi and Brazil Potash were in talks for a potential partnership related to the Amazon project, which is expected to start production in 2026.

Brazil Potash's mining project in Autazes, 75 miles (120 kms) southeast of the Amazonas state capital Manaus, would help reduce local farmers' dependence on imports for about 98% of their potash needs, the companies said.

Global potash prices increased after Russia's war in Ukraine prompted many Western countries to divert purchases from Russian and Belarusian fertilizer companies, home to some the world's main suppliers.

In response, the Brazilian government launched a plan to boost local production of fertilizers to cut its imports dependence, a move that attracted foreign attention and rekindled interest in some projects.

Overall, Brazil imports about 85% of its fertilizer requirements.

The potash sale price in the offtake and marketing agreements is based on the spot delivered price for granular muriate of potash (MOP) in Brazil, plus inland freight savings minus an discount.

Brazil Potash was granted an installation license by Amazonas state authorities for Autazes, but it was suspended by a court pending consultations with the indigenous Mura community about the project.

The company reiterated its aim to get licensed by year-end to secure funding and start building the $2.4 billion mine. The final step is getting an operating license.

(Reporting by Ana Mano; Editing by Aurora Ellis)