TORONTO, July 11 (Reuters) - Shares of MBAC Fertilizer Corp jumped as much as 7.5 percent on Thursday to a two-month high, after it said its Brazil mine had begun to produce phosphate.
MBAC mines and processes phosphate, a key crop nutrient, in the central Tocantins state near Brazil’s northern growing region.
Robert Winslow, an analyst with National Bank Financial, said the location of the company’s Itafós Arraias project gives it a logistical advantage over rival phosphate producers on the coast who depend on imported raw phosphate rocks.
“It’s one of the plants that is most strategically located,” Winslow said. “They’re much closer to the growers.”
The Itafós Arraias project produces a powder of single super phosphate, a form of the chemical that also includes sulfur, another nutrient used in farming.
“In the region where they’re providing it, this is one of the highest-demand fertilizers,” Winslow said.
The region where the project is located is known as the Cerrado, a tropical savannah belt of 204 million hectares once thought worthless for agriculture. But since new investments in the 1970s the area has become a breadbasket, with more than 100 million hectares still awaiting development.
“Brazil is one of the few countries that can dramatically grow its cropping area,” said MBAC Vice President Steve Burleton. “There’s lots of room for growth, and we’re right in the heart of where that’s happening.”
The company said its plant should reach full production during Brazil’s September through October planting season.
Domestic phosphate production in Brazil is growing, but the country is far behind producers such as Morocco, China and the United States, which together accounted for two-thirds of the world’s production in 2010.
The Itafós Arraias project is one of only a few integrated phosphate mining and processing plants in Brazil.
Giant mining company Vale S.A. runs several large projects including one in Minas Gerais state in the south of Brazil that together produce around half of the country’s supply. Anglo-American PLC also runs an integrated phosphate plant in Goiás state, south of Tocantins.
MBAC is working on another integrated plant located near Brazil’s northern growing regions, the Santana Project in Pará State, which the company expects to be producing in 2016.
MBAC shares were up 9 Canadian cents, or 4.2 percent, at C$2.23 by mid-afternoon in Toronto, after touching their highest price since April 30. (Reporting By Peter Henderson; Editing by Maureen Bavdek)