Canadian Farmers Investing in the Future of Canadian Produced Fertilizer
Fertilizer costs have long been a concern for farmers. It is the key production input over which they must have a measure of influence and participation.
The process of building a nitrogen fertilizer plant in Western Canada in which farmers across Canada could participate, started in 2010. This included meeting and consulting with civil and environmental engineers, owners and manufacturers of similar plants, finance and legal teams, all with the hope of putting together a plan to take this project forward with Canadian farmer ownership.
INVEST IN CANADIAN AGRICULTURE
Leading Global Agricultural Hub
#1 exporter of flaxseed, canola, pulses, mustard and durum wheat in the world.
Leading Global Export Hub
#5 agricultural exporter in the world overall, producing enough food to feed Canadians and export food to 169 other countries.
Largest Local Employer
The Canadian agriculture industry employs just over 2 million Canadians, making one in every eight jobs in Canada part of the agriculture and food industry.
Large Scale Footprint
There are over 113 million acres of agricultural land classified as suitable for long-term cultivation in Canada.
High Demand for Fertilizers
Canada is the 7th largest consumer of crop nutrients worldwide.
High Demand for Crop Protection
In Canada, crops must battle against 30,000 species of weeds, 3,000 species of nematodes and 10,000 species of insects.
Leading Exporter to USA
The United States is a net importer of nitrogen fertilizers and the world’s largest importer of crop nutrients.
major economic benefits
Genesis Fertilizers Production will have a significant boost to the economy including:
- New job creation including an estimated 5,700 person years during buildout and 590 full-time jobs post buildout including direct, indirect and induced employment
- Incremental gas demand to support the local gas industry
- Significant improvement of farmer
investors’ incomes via recurring dividends - Enhanced tax revenues:
Project history
An extensive Bankable Feasibility Study (BFS) was developed by Stantec Engineering to identify that Genesis Fertilizers Production would become a profitable entity.
Negotiations continued with major financial institutions, technology providers, Engineering Procurement and Construction (EPC) companies and potential strategic investors. Additional work was undertaken on the site plan as well as a review of the project to determine if there were alternatives to the original BFS. A project cost was established providing a financial framework to validate the projects viability. MOUs were executed with two potential strategic partners. There was consensus with the partners that it is necessary to advance Genesis Fertilizers Distribution to provide strategic partners and banks confidence that distribution can handle the off take of Genesis Fertilizers Production. We turned all our attention to building Genesis to alleviate the off take concerns.
The economics of the Genesis Fertilizers Production have not changed since inception of this project. The in-depth analysis shown in the bankable feasibility study and further corroboration with our prospective strategic partners and the EPC/Technology providers have only reconfirmed the extremely positive economics. These results show the cash cost of production for a metric tonne of urea is approximately $200 CAD/MT whereas the average farmer acquisition cost to farmers for a MT of Urea based on Green Markets over the last 10 years has averaged more than $550 CAD/MT. Based on these numbers the annual free cash flow is estimated at $250 million with an internal rate of return on the project of greater than 16%. The economics still make sense to keep pushing forward and our prospective strategic partners agree to continue on the path and take the necessary next steps after the first Genesis Distribution Supercenter is commercially operational.
The plan is solid, especially with the support of Canadian farmers, therefore, AgraCity has continued to promote the Genesis Fertilizers Production to strategic partners and financial institutions.
PARTNERS AND ADVISORS
