Brazil Potash Corp., has announced the execution of its third and final definitive commercial offtake agreement between Potássio do Brasil Ltda, a wholly-owned subsidiary of the company, and Kimia Solutions Ltda, part of Bulkfertz, a Brazilian fertilizer trading and distribution company established in 1978.
The binding agreement has established a 10-year take-or-pay commitment for Kimia to purchase up to 704 000 tpy of potash from the Autazes Potash Project at market prices.
"This agreement with Kimia represents exceptional commercial momentum, with all three major take-or-pay offtake agreements completed as planned, securing pre-sales of over two million tons of annual production for up to 17 years," said Matt Simpson CEO of Brazil Potash. "Achieving approximately 91% contracted capacity positions us to further advance project financing discussions, knowing we have industry leading Brazilian partners committed to directly purchase or distribute our potash."
"This commitment with Brazil Potash represents a transformative opportunity for Brazilian agriculture and aligns perfectly with our mission to strengthen our partnership with the domestic fertilizer supply chains," added Elie Cohen, CEO of Kimia Solutions. "As part of the Bulkfertz Group, we have the distribution infrastructure and market relationships to ensure this domestically produced potash reaches farmers efficiently and cost-effectively throughout our current and loyal customer base all over Brazil."
“This agreement not only enhances our product portfolio but also supports Brazil's strategic objective of reducing import dependency while providing our agricultural supply chain with a reliable, competitive source of this critical nutrient." Commented Nelson Moreno, partner of Kimia Solutions and founder of Bulkfertz Group.
Key terms of the agreement
- Volume commitment: Kimia agreed to purchase between 23% to 32% of Brazil Potash's annual potash production, up to a maximum of 704 000 tpy, on a take-or-pay basis.
- Contract duration: the agreement has a 10-year term, aligning project financing requirements and ensuring long-term revenue visibility and stability.
- Production ramp-up: Kimia’s offtake obligations will commence upon the start of production and scale proportionally during the ramp-up period to full production capacity.
- Strategic flexibility: the agreement permits Brazil Potash to assign future payment rights to financial institutions for project financing purposes.
Commercial strategy progress
The Kimia Agreement has provided a strong revenue visibility essential for project financing and demonstrates robust market demand for domestically produced Brazilian potash. The remaining production will be reserved for spot sales to capture potential market premiums, accommodate maintenance outages and production variability.
This commercial milestone follows the Company's recently signed memorandum of understanding (MoU) with Fictor Energia for approximately US$200 million in power line construction funding and a US$20 million equity investment. Together, these strategic partnerships significantly de-risk both the commercial and infrastructure components of the Autazes Project.