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What's going on, guys? This is Aaron from Departures Capital and here with Matt Simpson, CEO of Brazil Podash. Pleasure to have you on today, Matt. How are you doing?
Excellent. Thanks for having me on, Aaron. Yes, excited to be chatting. So, this video was brought to you on behalf of Brazil Podach. And, you know, now that we've got you on, can you tell us a bit more about Brazil Podach and your vision for the company, Matt?
Brazil is one of the world's largest exporters of agricultural goods there. They they export about $167 billion a year, but the country's achilles heel is that they import 85% of their fertilizer, including 98% of their pod ash when potentially the second biggest basin in the world is sitting in their backyard being developed by Brazil potach. So simply because we're in Brazil and everyone else is located about 12,000 to 20,000 kilometers away in Canada, Russia, Barus, Germany, Israel, our cost to extract, process, and deliver this essential nutrient with no substitute is less than just the transportation cost alone for everyone else.
Very interesting. I didn't know that. So Brazil Pach recently made headlines with its progress on the Otaz Pach project. Can you share the latest developments and what milestones investors should be watching for in the coming months?
So, Brazil Pach is now fully permitted for construction of our project and we've actually started some of the early uh works on site such as the um the vegetation management type work. Uh drilled a couple water wells and moving ahead, I think it's going to be a really exciting year for investors. Uh we did announce a non-binding memorandum with a company called Key Trade which is a Swiss-based uh trader that has a very large presence in Brazil for 1 million tons of offtake. So our expectation is to convert thatou into a binding contract in the near future and that would be in addition to the existing offtake contract that we have with Amaji which is one of the biggest soybean farmers in the world. And then finally, we expect a third contract to also come into play in the near future, which would have us at about 2 million of our 2.2 million tons under long-term contract. That the reason that's important, Aaron, is that banks and and export credit agencies that will loan us the money to build the project want to know who's going to buy your product, what's the price, and and are they creditworthy. So, those are pretty important milestones. Uh we also have had some good discussions with groups on carving out the 200 million that's going to be required to build our high voltage power line. This is the only major infrastructure at site and we're talking to some infrastructure funds and and power transmission companies right now. So I think that's going to be something pretty interesting.
Lots of things to look forward to. So with global concerns around food security and fertilizer supply chains, how do you see Brazil podash's role evolving with both the domestic Brazilian market and the broader international agricultural sector?
So when when we look at Brazil, it's a really interesting country because Brazil has amongst the highest amount of land suitable to grow food. They have the highest amount of fresh water in the world and they have a year- round climate where they can grow three crops a year. So unlike you know countries in in in say North America or Europe you only typically do about one crop a year in Brazil they never stop growing. They just rotate from soybean to cotton to corn. And that's why as the world continues to grow its population we also have a growing middle class that wants more protein in their diet. Today Brazil already feeds one in 10 plates of food and it's only going to improve over time.
Wow. So you know, podach is a critical input for agriculture. What what what pish does Aaron is it strengthens the stem of a plant to make it more resilient to stress. So if you even just think recently how crazy the weather has been where we'll see 20°ree temperature changes within even just a couple days or in other parts of the world you'll have flooding followed by drought all all within short periods of time. All this causes stress and when plants are stressed they don't grow very well. So pottish helps plants grow through or or survive those those stresses and that's why it's so important.
So podach is a critical input for agriculture and demand is expected to rise with global population growth. How is Brazil podash positioning itself to meet this demand sustainably especially given the environmental sensitivities surrounding the project?
Well the the concern with podach is is an alligash today that comes from Canada, Russia and Bellarus. and and it's quite concerning to think that, you know, roughly 42% of the world's pot ash is effectively controlled by by Russia. So we we would never want to find ourselves waking up one day and not having access to a critical nutrient to grow our food. And then when we look at Brazil, Brazil's the world's largest net importer of potach, about 22% of of market share. This is a 20 to30 billion a year market is is into Brazil. And Brazil's market is growing at 6.8% a year, which is four times the rest of the world. So having a domestic source of potach in Brazil is going to help not only with Brazil's food security but also global food security.
So for current and prospective investors, what makes Brazil potach a compelling opportunity today compared to other resource development companies in the fertilizer sector?
Well, with with the fertilizer sector, much like with any bulk commodity, transportation ends up being a far greater cost than your cost of extracting and processing. And specifically for podash delivered into Brazil, most of the importers spend about 2 and a half times on transportation as they do compared to the extraction and processing. And simply because we're in Brazil and we're only 8 kilometers away from a major inland river that connects to the largest farming region in the country. It's called Monogo State. um we'll have downside price protection where it's not possible for the price of potach to glow below about $280 to $290 a ton compared to our cost to produce of 79. So in that worst case scenario, we're making about 600 million a year for a product that people have no choice but to buy because we all need to eat for a very very long life.
So Matt, you've been leading Brazil Pach through complex regulatory, logistical, and stakeholder challenges. What have been your key leadership takeaways so far? And how do they shape your vision for the company's next phase?
So in in in our case, the project is located in a environmentally sensitive part of the world. It's it's in the Amazon state of Brazil and and that leads to a lot of fear-mongering sometimes by by NOS's and and it's important to get ahead of that and and make sure people have the facts. So, we've spent a lot of effort working with um local media, with the local indigenous population, making sure that people have the facts and and and the facts are this this project is located on cattle farmland. It's not impacting any primary rainforest. It's an underground mine with dry stack tailings and and really what you're digging up there is is salt. It's it's basically pish is formed by failed ocean. So you're really just separating potassium chloride, which is your pod ash, from sodium chloride, which is salt that you'd put on your food or or that we put on the road to to melt ice. And all that salt is dry stacked and put back underground. So there's no chemicals used in processing and the footprint is quite small.
Well, thank you for all that information, Matt. I definitely learned something today and uh you know, best of luck. Seems like 2025 is going to be a busy year for you, so look forward to having you back on for more updates.
Excellent. Thanks, Aaron.
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