MG fertilizer company decides to increase production capacity 7 times

The war waged by Russia against Ukraine made Verde Agritech, a company with a mine and factory in São Gotardo, in the interior of Minas Gerais, decide to expand its production of potassium fertilizers later this year.

The company closed 2021 with around 400 thousand tons produced; the capacity expansion planned for the third quarter of this year will result in the production of up to 3 million tons per year.

A new unit had been under construction since last year, but last Thursday (3) the company announced to investors that the board of directors had approved another R$51 million in investments in the plant, which should make production there reach up to 2.4 million tons.

Brazil is highly dependent on fertilizer imports and Russia is one of the main suppliers. The second largest producer of potash, the country ruled by Vladimir Putin has 19% of the global market.

In 2021, Brazil imported 9.3 million tons of fertilizers from Russia, 24% more than the 7.5 million tons of the previous year, according to data from Secex (Secretariat of Foreign Trade).

Last week, Russia recommended the country’s fertilizer makers to suspend exports due to Western sanctions in retaliation for the war, prompting producers to look for alternatives.

“From 15% to 20% of the fertilizer that Brazil imports comes from Russia, there is now a very large exercise to try to get this out of Russia. It is really something worrying, especially for our summer crop. The second crop is now guaranteed “, said Marcos Fava Neves, a professor at USP (University of São Paulo) specializing in agribusiness.

According to him, Brazil took a while to see the need to expand fertilizer production and needs a national plan for the sector, already looking at the scenario for the next 15 years.

“We have to expand [a produção] where possible. Due to world demand, Brazil will have to grow from 15 million to 20 million hectares in planted area in up to 15 years, which makes a well-designed fertilizer plan essential,” he said.

Currently, Brazil imports 91% of the potash it uses and 80% of global production is concentrated in three countries: Canada, responsible for 32% of shipments to Brazil since 2017, Russia (26%) and Belarus (18%). This means that, even with the expansion of the factory in the Minas Gerais city of 36,000 inhabitants, the country will continue to be heavily dependent on foreign countries.

According to Verde Agritech, the initial production of the new plant was up to 1.2 million tons, but with the investment, the capacity will double.

In a statement to the market, the company said that the objective is to finance the expansion plan “through a combination of future cash flow and debt financing backed by future sales contracts”.

The operation in São Gotardo does not require a dam and the potassium is chlorine-free, unlike imported potassium chloride. The source of production is glauconitic siltstone, a greenish rock.