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INTERVIEW-Brazil miner plans to pioneer slow-release potash

11/30/10 - 01:30 PM ET - Reuters

* Amazon Plc exploring large potash reserve in southeast

* Expects to begin production in 2013, serve local farming

* Firm still to apply for mining, environmental permits

By Peter Murphy

BRASILIA, Nov 30 (Reuters) - A Toronto-listed Brazilian mining start-up, Amazon PLC , plans to pioneer a unique method of producing thermopotash that makes the slow-release fertilizer economically viable, the company's chief executive said on Tuesday.

Amazon PLC is seeking a patent for a pyrometallurgical process it will use to produce the fertilizer ingredient which it says will give it slow-release properties, reducing the total amount of the input farmers need to apply.

Amazon has completed exploration of its potash deposit in Brazil's southeastern farming belt from where it will produce thermopotash from 2013 from green-colored glauconite rock which can be mined using the cheaper open-pit method.

"Thermopotash is a new product but it is far superior," Cristiano Veloso told Reuters in an interview. He said that unlike regular potash, it was not soluble in water, meaning the mineral did not leach and was less liable to be washed away by rain.

"The (plant) roots release a very weak acid which makes it soluble," he said. Thermophosphate with similar properties has been produced in Brazil for decades.

Analysts Salman Partners gave the company a "Top Pick" recommendation in a report issued this month, highlighting its low capital costs, but said a key risk was the lack of an existing market for thermopotash, as it was not yet available.

The company's shares hit a lifetime high of C$4.55 on Tuesday.

Brazil is highly dependent on fertilizer imports for its agriculture sector, among the world's largest, and is seeking to raise local output to supply more of its annual consumption which has been around 23 million tonnes since 2007.

Amazon has identified 105 million tonnes of inferred resources at the stretch of the deposit it plans to mine in the southeastern state of Minas Gerais. It will raise output to 2.2 million tonnes of thermopotash by 2015, to sell to fertilizer blending companies in Brazil.

Having completed its exploratory phase, the company is preparing its application for mining rights and a subsequent environmental license, and aims to begin constructing the mine in early 2012. Reaching its target output for 2015 would require investment of $269 million in the mine, Veloso said.

Unlike other rocks in which potash can be found, glauconite must undergo an energy-intensive cooking process at 1,300 degrees Celsius to break it down so the nutrients become available to plants.

The higher production cost involved versus regular potash imported into Brazil mainly from Canada and Russia, and the relatively low potash content in the glauconite compared to other deposits, would be mostly offset by the proximity of the deposit to the end user, Veloso said.

"We have improved the process of producing thermopotash by using a continuous rotary kiln so instead of using electricity, we can use alternative energy sources," Veloso said.

Other firms have attempted to extract potash from the same verdete slate in the last few decades but used costly electric arc furnaces. Amazon says its method will make thermopotash viable for the local market.

Another advantage of thermopotash Veloso highlighted was the absence of chloride found in regular potash fertilizer. That had been shown to improve the taste of coffee and avoid run-off of chloride into the water table and rivers which some argue is environmentally damaging.

Brazil is the world's top coffee producer and more than half its coffee is grown in Minas Gerais.

The glauconite also contained other micronutrients including calcium and magnesium that were beneficial to plants. A study by Uberlandia University in Minas Gerais showed other substances in it were inert to soil and crops. (Editing by David Gregorio)