Sunday, November 8, 2009

Potash in the Amazon: Drilling Commences, 3rd Largest World Reserve

Considered the last great frontier of exploration for potash in the world, the region where the Madeira and Amazon rivers meet will be reactivated later this month with the start of drilling byPotassio do Brasil, a company that operates with Canadian capital.

The region, which may contain the third largest iron ore reserves in the world, is considered strategic by the government, which is moving to promote a return to mining of Petrobras, 20 years after the extinction of Petromisa subsidiary. Potassio Do Brasil, which belongs to the financial group Forbes & Manhattan through Falcon Metals, is finalizing preparations for drilling the first well in the region in nearly 30 years. The idea is that the well is drilled later in November to start a program of up to 20 wells during the next year in Autazes Itapiranga at a cost of $25 million. If confirmed the potential of the deposit, the investment could reach U.S.$ 2.5 billion, for the extraction of 2 million tons per year.

The region has been explored by Petrobras, which noted the existence of 1.1 billion tons in Fazendinha mine in the town of Nova Olinda do Norte, but abandoned the project in the 70's. The mine was actually transferred to Falcon Metals but the process was suspended at the end of last year, a sign that, the government wants more control over their production given the growing dependence of the world on potassium.

Petrobras says it is reviewing the project and there is no decision yet on the future of the mine. The company, however, has approved expansion plans in the area of fertilizer - with the construction of two factories of ammonia and urea based on natural gas, doubling the nation's capacity, and may expand activities for the extraction of potassium. The information is the newspaper O Estado de S. Paulo.

See also Bloomberg article on Brazil's potash.

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