Agriculture

Aguia wins licence for Brazilian phosphate fertiliser project

Wed 02 Nov 22, 11:35am (AEDT)
Generic image of a corn crop by Glenn Peters
Source: Unsplash

Key Points

  • Aguia Resources has won a greentick from the environmental regulator to build its domestic phosphate fertiliser project
  • If built, the company could become Brazil’s first domestic producer of phosphate fertiliser in a grain growing region
  • However, company's project remains embroiled in a civil court case brought by the public

Aguia Resources (ASX:AGR) has won a construction licence from relevant authorities in Brazil to go ahead with the construction of its organic phosphate fertiliser project in Rio Grande do Sul, called the Três Estradas project.

Shareholder sentiment is bullish on the news today, which maybe makes sense, given that Aguia is seeking to build out an organic fertiliser production asset in one of Brazil’s most populated grain-growing regions. 

Aguia’s product, called Pampafos, is big on ESG-marketing, but also backed up by promising studies. In June this year, the company showed it could equate, if not beat, the yields offered by chemical fertilisers on crops. 

Pampafos can do it all with a much cleaner manufacturing profile (in a recently drier than usual region with no shortage of soil mitigation concerns present.) 

Government support

Regardless, with an approval for construction at Três Estradas now confirmed by the State Secretary for Environment (during a speech given at the Lavras Agricultural Fair, something of a local trade expo,) and witnessed by the State Secretary for Agriculture, it’s clear Aguia’s phosphate project is ticking all the right boxes for relevant regulators. 

There are further considerations driving positive sentiment today, beyond the fact of the project being in a grain growing region. 

Currently, all phosphate fertiliser in the region is imported. Aguia notes its phosphate project’s JORC-compliant measured and indicated resource of 83Mt grading at 4.11% phosphorus pentoxide. 

This suggests Aguia, post-processing, could make significant inroads into becoming a domestic fertiliser heavyweight. The Development Bank of Southern Brazil appear to think the same, having handed Aguia a loan to cover half the project capex. 

But, there’s a problem

There’s a catch, however. Aguia remains embroiled in a local civil lawsuit launched by members of the public and taken on by the Brazilia federal prosecutor’s office. 

Aguia describes itself as having received a favourable decision earlier in the year but notes an ongoing injunction request stopping it from moving ahead with construction, at this time. 

While the state secretaries for environment and agriculture espoused Aguia’s project at a trade expo, the company is still tied up in the Brazilian courts. Aguia expects to be let free from that legal netting in the near future. 

The company notes the Brazilian prosecutor smiled on Aguia’s decision to attempt to negotiate with plaintiffs. 

No timeline for conclusion of the lawsuit is given. 

“Key Milestone”: Management 

“I am extremely proud to announce to our shareholders the granting of the construction licence, which is a key milestone in our path towards production,” Aguia MD Dr. Fernando Tallarico said. 

“The granting of this permit reaffirms the high quality of our technical and environmental studies…we want to thank the state environmental agency for the hard work and dedication in helping us bring this development to southern Brazil.” 

Aguia's three month charts
Aguia's three month charts

 

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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