Brazil’s Itafos Arraias Phosphate Fertilizer Business Set to Be Idled Indefinitely

Brazil’s Itafos Arraias Phosphate Fertilizer Business Set to Be Idled Indefinitely

Itafos has decided to idle Itafos Arraias, a phosphate fertilizer business located in Tocantins, Brazil, and to suspend the previously announced repurpose plan at Itafos Arraias. The decision comes as part of a disciplined approach to capital allocation in light of the continued downward pressure on global fertilizer prices. “While we have demonstrated the viability of the repurpose plan at Itafos Arraias, including producing and commercializing new premium products, market prices have continued to decline and have currently reached unsustainable levels,” said Dr. Mhamed Ibnabdeljalil, interim CEO of Itafos, and added that “as a result of these external factors, we have decided to idle Itafos Arraias to manage the cycle, while we evaluate strategic options for the business.”
During 2019, the company implemented the repurpose plan at Itafos Arraias in order to optimize Itafos Arraias’ finished fertilizer production with a multi-product portfolio of higher grade single superphosphate (SSP), SSP with micronutrients (SSP+) and premium PK compounds. The repurpose plan at Itafos Arraias was intended to enhance Itafos Arraias’ competitive positioning and profitability while reducing its operational and environmental risk profile. To enable the repurpose plan, Itafos Arraias has been purchasing, receiving and processing higher grade phosphate rock from third parties during 2019, including entering into a multi-year phosphate rock supply agreement to purchase higher grade phosphate rock from the OCP Group.

Moreover, the company has advanced other aspects of the repurpose plan, including production and sales of higher grade SSP and SSP+ and premium PK compounds, implementation of an efficient logistics process related to third party phosphate rock, reorganization of the site and commissioning of equipment. Also in connection with advancing implementation of the repurpose plan, during 2Q19, the company idled Itafos Arraias’ existing mines, tailings dam and the beneficiation plant. Notwithstanding the idling of Itafos Arraias, the Tocantins-located phosphate fertilizer business has and will continue to maintain all licenses and permits in good standing and compliance with existing regulations.

Share