"Pacific Potash Corp. - Ready to Drill, Set to Discover, Going Up Matchless"
Rockstone Research Ltd. comments on the recent developments in the potash market and initiated coverage on Pacific Potash Corp. (TSX.V: PP). The full analysis can be viewed as a PDF using this link:
Over the next decade, Brazil is expected to become an agricultural super power making it one of the largest users of potash fertilizers on the planet. While potash consumption seems to have peaked in India and China as currently declining, the opposite is true in Brazil with a potash consumption showing steady long-term growth potential. It is forecasted that Brazil becomes the biggest importer of potash globally by the year 2020.
Over the last 15 years, the total value of Brazil‘s crop rose from $23 billion to $126 billion and it is estimated to increase a further 40% between 2010 and 2019. Additional data by SOBER suggests substantial increases of agricultural production for commodities that consume most of the potash. Brazil owns 30% of the world‘s arable farmland and it is projected that the country will have the world‘s fastest growing agribusiness economy over the next 50-100 years.
Brazil has 500 million hectares of potentially arable land of which 100 million are currently under cultivation. This compares with the United States‘ 350 million, Russia‘s 300 million, and China‘s 200 million if they used every hectare available. Brazil imports more than 90% of its potash requirements with imports mainly from Saskatchewan and the Ural region incurring total delivered transport and import costs into Brazil of around $90 per ton. The Brazilian government is not sitting around waiting for this, as it has made it a goal to financially back domestic projects in order for the country to become fertilizer independent. The Brazilian government has decided to use all powers to become potash-independet in the next decades. This will put the exploration and development of Brazilian potash desposit on the fast-track.
Pacific Potash is an early entrant into a brand new world-class potash basin that has the potential to rival or surpass some of the great producing basins worldwide. What makes this even more exciting is the fact that being located in the middle of the new breadbasket of the world gives the company a unique Brazilian advantage:
- Low-cost production,
- world‘s fastest growing agro economy,
- almost zero domestic production and
- potentially billions in logistical cost advantage.
Please read the disclaimer within the report.
Rockstone Research Ltd.
Analyst: Stephan Bogner (Dipl. Kfm., FH)
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