Verde AgriTech Ltd (TSX: “NPK”)
(“
Verde” or the “
Company”) is
pleased to announce that its potassium multinutrient specialty
fertilizer, K Forte® (the “
Product”), has a
significantly lower carbon footprint than traditional potassium
chloride (“
KCl”) fertilizer, according to the
calculation tool developed by the Brazilian government, RenovaCalc.
The emission factor in Renovacalc applied to Potassium Chloride,
with 60% K2O mass content, is set at 0.455 tons of carbon dioxide
equivalent per ton of K2O (“t CO2e/t K2O”), sourced from the
Ecoinvent database.1 Following Renovacalc’s criteria and based on K
Forte®’s Life Cycle Assessment (“
LCA”), the
emission factor of the Product is set at 0.0655 t CO2e/t K2O.2,3
Therefore, the substitution of KCl fertilizer with Verde's Product
results in a reduction in emissions of 0.39 t CO2e/t K2O, which
represents an 85.6% reduction of the carbon footprint for K2O
within sugarcane and corn ethanol production in Brazil.
Brazil has approximately 3.3 million hectares of
sugarcane crops and 1.1 million hectares of corn dedicated to
biofuels.4 It takes 20 kg of the Product per ton of sugarcane and
10 kg of the Product per ton of corn, to replace KCl in K2O
supply.
"Brazil's dependence on potash imports,
primarily from Canada, Russia, and Belarus, which account for over
95% of its total consumption, has significant environmental
impacts. Given that agriculture contributes about 10-12% of the
world's greenhouse gas emissions, the need for mitigation
initiatives within corporate value chains is critical.5 Our Product
not only provides a high-quality source of potash and other
nutrients but also enhances soil biodiversity due to its salinity
and chloride-free properties. In addition, the replacement of KCl
with K Forte® in biofuel agricultural production could
significantly contribute to a more environmentally responsible
supply chain”, stated Cristiano Veloso, Verde’s Founder and
CEO.
The substitution of KCl fertilizer with Verde's
Product results in immediate carbon reductions and thus bolsters
Verde's sales value proposition, potentially strengthening Product
sales among farmers who track their emissions to meet
decarbonization goals.
BRAZILIAN NATIONAL BIOFUELS POLICY AND
RENOVACALC PARAMETERS
The Brazilian National Biofuels Policy
(“RenovaBio”) is a federal government initiative
formally established by Law 13.576/2017.6 RenovaBio aims to support
Brazil's commitments under the Paris Agreement within the United
Nations Framework Convention on Climate Change. The program focuses
on enhancing energy efficiency and reducing greenhouse gas
emissions across the production, marketing, and use of biofuels
through lifecycle assessment mechanisms. Additionally, it seeks to
promote the expansion of biofuel production and use within Brazil’s
energy matrix, ensuring a consistent fuel supply.
RenovaBio's guiding principle for achieving its
objectives is to incentivize fuels that have a lesser impact on
global warming, specifically those that result in lower lifecycle
greenhouse gas (“GHG”) emissions, such as
biofuels.
The policy operates through the following
steps:7
- Establishing of long-term national
goals (over 10 years) for reducing GHG emissions in the Brazilian
fuel matrix,
- Breaking down of these national
targets into individual mandatory targets for fuel producers,
- Assessing the performance of fuel
producers through RenovaCalc. The tool employs an attributional
approach for the lifecycle assessment (LCA) of biofuels,
encapsulating the "well-to-wheel" scope which assesses the
environmental impact from fuel extraction to its end use in vehicle
propulsion. The tool utilizes inventory data from the Ecoinvent
v.3.1 database for upstream agricultural processes, prioritizing
inventories specific to Brazil (BR), global averages (GLO), and,
when unavailable, data from the 'Rest of the World' (RoW), which is
an exact copy of the GLO dataset with adjusted uncertainty. For
biofuel distribution and usage, RenovaCalc relies on official and
sectoral statistics and a tool for estimating greenhouse gases for
intersectoral sources. With these inputs, RenovaCalc calculates the
carbon intensity (CI) of produced biofuels using standardized
lifecycle emission factors.
- Translating biofuels’s carbon
intensity into an Environmental Efficiency Score
(“EES”).
- Certifying fuel production based on
each producer's EES, leading to the generation of Biofuel
Decarbonization Credit Certificates (“CBIOs” from the Portuguese
“Créditos de Descarbonização de Biocombustíveis”), awarded to
producers of renewable biofuels based on the volume of production
and the sustainability of their processes. CBIOs are digital
financial securities held by financial institutions authorized by
the Brazilian National Agency of Petroleum, Natural Gas and
Biofuels (“ANP”), representing the reduction of
one ton of carbon dioxide emissions, verified by RenovaCalc through
each fuel's lifecycle analysis.
- These certificates can then be sold
in the financial market, primarily to fossil fuel distributors who
are mandated under Brazilian law to offset a portion of their
carbon emissions by purchasing CBIOs.8 This certification is
conducted by auditors accredited by the ANP.
Based on Brazil’s potash consumption for
sugarcane and corn for ethanol production, the use of K Forte® as a
potash source could potentially avoid the emission of up to 300,429
tons of CO2 per year,9 due to the reduction in emissions associated
with KCl production from 350,912 tons of CO2 to 50,483 tons
associated with K Forte® production. Given the average price of
CBIOs in the last 6 months, at C$28.20,10 this substitution could
generate the equivalent to C$8.5 million in CBIOs annually.11
Replacing KCl with the Product in a standard
biofuel production plant12 would result in an approximate 0.8%
increase in the Environmental Efficiency Score of the production
chain.
“The potential annual avoidance of CO2 emissions
is equivalent to taking approximately 65,000 cars off the road for
an entire year,13 or the amount of CO2 absorbed by approximately 5
million tree seedlings grown over ten years. This represents a
tremendous impact,” commented Mr Veloso.
BRAZILIAN AGRIBUSINESS DECARBONIZATION
Decarbonization in agriculture is becoming an
ever more relevant topic. Brazil is advancing its agenda for
reducing GHG from agriculture through the "Adaptation and Low
Carbon Emission Plan in Agriculture - ABC+" (2020-2030). This
initiative is designed to support Brazil's commitment to the Paris
Agreement by facilitating climate change adaptation and promoting
sustainable landscape management.14
Energy agriculture presents a pivotal
opportunity to transform Brazilian agribusiness as global economic
growth fuels increased energy demand. Ethanol and biodiesel, as
alternatives to fossil fuel energy, are gaining traction. Produced
from renewable resources such as sugarcane and forest biomass,
these biofuels are a step towards sustainability. Sugarcane
ethanol, noted for its exceptionally low carbon footprint,
contributes significantly to Brazil's renewable energy
matrix—accounting for 15.4% of the national energy matrix or 32% of
all domestically offered renewable energy. This places Brazil
(47.4%) well above the global average (14.1%) and the OECD
developed countries (11.5%) in the adoption of clean and renewable
energy. The sugarcane energy chain alone generates over US$100
billion in gross value, contributing roughly US$40 billion to
Brazil's GDP, equivalent to about 2% of the national GDP.15
In Brazil, a 27% ethanol blend in gasoline has
been legally mandated since 2015, making the country the world's
second-largest ethanol producer. Ethanol, derived from both
sugarcane and corn, can be used either in its hydrated form or
mixed with gasoline (anhydrous ethanol), significantly aiding
environmental preservation and air quality improvement by reducing
GHG emissions by up to 90% compared to gasoline.16
RenovaBio sets annual decarbonization targets
for the fuel sector to boost biofuel production and use in the
nation's transport energy matrix. By 2030, RenovaBio aims to
achieve more than a 10% reduction in GHG emissions within the
Brazilian transport sector, significantly contributing to the
national commitment of a 43% total GHG emission reduction.17
Internationally, similar initiatives to
RenovaBio, such as the Low Carbon Fuel Standard (LCFS) of the
California government and the Renewable Energy Directive (RED) of
the European Union, have demonstrated success and longevity, with
over a decade of implementation.
ABOUT VERDE AGRITECH
Verde Agritech is dedicated to advancing
sustainable agriculture through the innovation of specialty
multi-nutrient potassium fertilizers. Our mission is to increase
agricultural productivity, enhance soil health, and significantly
contribute to environmental sustainability. Utilizing our unique
position in Brazil, we harness proprietary technologies to develop
solutions that not only meet the immediate needs of farmers but
also address global challenges such as food security and climate
change. Our commitment to carbon capture and the production of
eco-friendly fertilizers underscores our vision for a future where
agriculture contributes positively to the health of our planet.
For more information on how we are leading the
way towards sustainable agriculture and climate change mitigation
in Brazil, visit our website at https://verde.ag/en/home/.
COMPANY UPDATES
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CAUTIONARY LANGUAGE AND FORWARD-LOOKING
STATEMENTS
All Mineral Reserve and Mineral Resources
estimates reported by the Company were estimated in accordance with
the Canadian National Instrument 43-101 and the Canadian Institute
of Mining, Metallurgy, and Petroleum Definition Standards (May 10,
2014). These standards differ significantly from the requirements
of the U.S. Securities and Exchange Commission. Mineral Resources
which are not Mineral Reserves do not have demonstrated economic
viability.
This document contains "forward-looking
information" within the meaning of Canadian securities legislation
and "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. This
information and these statements, referred to herein as
"forward-looking statements" are made as of the date of this
document. Forward-looking statements relate to future events or
future performance and reflect current estimates, predictions,
expectations or beliefs regarding future events and include, but
are not limited to, statements with respect to:
- the estimated amount and grade of
Mineral Resources and Mineral Reserves;
- the estimated amount of CO2 removal
per ton of rock;
- the PFS representing a viable
development option for the Project;
- estimates of the capital costs of
constructing mine facilities and bringing a mine into production,
of sustaining capital and the duration of financing payback
periods;
- the estimated amount of future
production, both produced and sold;
- timing of disclosure for the PFS
and recommendations from the Special Committee;
- the Company’s competitive position
in Brazil and demand for potash; and,
- estimates of operating costs and
total costs, net cash flow, net present value and economic returns
from an operating mine.
Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives or future events or performance
(often, but not always, using words or phrases such as "expects",
"anticipates", "plans", "projects", "estimates", "envisages",
"assumes", "intends", "strategy", "goals", "objectives" or
variations thereof or stating that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved, or the negative of any of these terms and similar
expressions) are not statements of historical fact and may be
forward-looking statements.
All forward-looking statements are based on
Verde's or its consultants' current beliefs as well as various
assumptions made by them and information currently available to
them. The most significant assumptions are set forth above, but
generally these assumptions include, but are not limited to:
- the presence of and continuity of
resources and reserves at the Project at estimated grades;
- the estimation of CO2 removal based
on the chemical and mineralogical composition of assumed resources
and reserves;
- the geotechnical and metallurgical
characteristics of rock conforming to sampled results; including
the quantities of water and the quality of the water that must be
diverted or treated during mining operations;
- the capacities and durability of
various machinery and equipment;
- the availability of personnel,
machinery and equipment at estimated prices and within the
estimated delivery times;
- currency exchange rates;
- Super Greensand® and K Forte® sales
prices, market size and exchange rate assumed;
- appropriate discount rates applied
to the cash flows in the economic analysis;
- tax rates and royalty rates
applicable to the proposed mining operation;
- the availability of acceptable
financing under assumed structure and costs;
- anticipated mining losses and
dilution;
- reasonable contingency
requirements;
- success in realizing proposed
operations;
- receipt of permits and other
regulatory approvals on acceptable terms; and
- the fulfilment of environmental
assessment commitments and arrangements with local
communities.
Although management considers these assumptions
to be reasonable based on information currently available to it,
they may prove to be incorrect. Many forward-looking statements are
made assuming the correctness of other forward looking statements,
such as statements of net present value and internal rates of
return, which are based on most of the other forward-looking
statements and assumptions herein. The cost information is also
prepared using current values, but the time for incurring the costs
will be in the future and it is assumed costs will remain stable
over the relevant period.
By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and
specific, and risks exist that estimates, forecasts, projections
and other forward-looking statements will not be achieved or that
assumptions do not reflect future experience. We caution readers
not to place undue reliance on these forward-looking statements as
a number of important factors could cause the actual outcomes to
differ materially from the beliefs, plans, objectives,
expectations, anticipations, estimates assumptions and intentions
expressed in such forward-looking statements. These risk factors
may be generally stated as the risk that the assumptions and
estimates expressed above do not occur as forecast, but
specifically include, without limitation: risks relating to
variations in the mineral content within the material identified as
Mineral Resources and Mineral Reserves from that predicted;
variations in rates of recovery and extraction; the geotechnical
characteristics of the rock mined or through which infrastructure
is built differing from that predicted, the quantity of water that
will need to be diverted or treated during mining operations being
different from what is expected to be encountered during mining
operations or post closure, or the rate of flow of the water being
different; developments in world metals markets; risks relating to
fluctuations in the Brazilian Real relative to the Canadian dollar;
increases in the estimated capital and operating costs or
unanticipated costs; difficulties attracting the necessary work
force; increases in financing costs or adverse changes to the terms
of available financing, if any; tax rates or royalties being
greater than assumed; changes in development or mining plans due to
changes in logistical, technical or other factors; changes in
project parameters as plans continue to be refined; risks relating
to receipt of regulatory approvals; delays in stakeholder
negotiations; changes in regulations applying to the development,
operation, and closure of mining operations from what currently
exists; the effects of competition in the markets in which Verde
operates; operational and infrastructure risks and the additional
risks described in Verde's Annual Information Form filed with SEDAR
in Canada (available at www.sedar.com) for the year ended December
31, 2021. Verde cautions that the foregoing list of factors that
may affect future results is not exhaustive.
When relying on our forward-looking statements
to make decisions with respect to Verde, investors and others
should carefully consider the foregoing factors and other
uncertainties and potential events. Verde does not undertake to
update any forward-looking statement, whether written or oral, that
may be made from time to time by Verde or on our behalf, except as
required by law.
For additional information please
contact:
Cristiano Veloso, Chief
Executive Officer and Founder
Tel: +55 (31) 3245 0205; Email:
investor@verde.ag
www.verde.ag | www.investor.verde.ag
__________________________________1 Please see the
“RenovaCalc” section for further information on the calculation
assumptions.2 Considers K Forte®’s “cradle-to-gate” emissions, in
accordance with RenovaCalc’s parameters. RenovaCalc’s standardized
lifecycle emission factors encompass all emissions from the
extraction of raw materials through to the completion of
production, not including shipping emissions. For biofuel
distribution and usage, RenovaCalc relies on official and sectoral
statistics and a tool for estimating greenhouse gases for
intersectoral sources. With these inputs, RenovaCalc calculates the
Environmental Efficiency Score (“EES”) of produced biofuels. Please
see the “RenovaCalc” section for further information on the
calculation assumptions.3 For K Forte®, containing 10% K2O, a
tenfold increase in application is considered to match the mass
equivalent of K2O used in KCl, achieving equivalence to 1 kg of
K2O.4 Assumptions: 31.193 million liters of ethanol produced per
year (Source: Sugarcane and Bioenergy Observatory –
UNICAdata). Dosages of 100 and 200 kg of K2O per hectare,
respectively, for corn and sugarcane. Assuming the average yield of
4,025 liters per hectare for corn and 8,100 liters per hectare for
sugarcane. K Forte (10% K2O) and KCl (60% K2O).5 BRENTRUP, F.;
HOXHA, A.; CHRISTENSEN, B. Carbon footprint analysis of mineral
fertilizer production in Europe and other world regions. [s.l:
s.n.].6 To meet the obligations assumed by Brazil at the United
Nations Conference on Climate Change 2015 (COP 21), the Brazilian
National Biofuels Policy (RenovaBio) was implemented in 2017
by Law No. 13,576/2017, with additional regulations
established by Decree No. 9,888/2019 and Ordinance No. 56 of
December 21, 2022 issued by the Brazilian Ministry of Mines and
Energy. For further information, please see:
https://www.gov.br/mme/pt-br/assuntos/secretarias/petroleo-gas-natural-e-biocombustiveis/renovabio-1/renovabio-ingles7
Sources: a) ANP (2018). RenovaBio – Strategic
Guidelines – Proposal submitted for public consultation.b) ANP
(2018). RenovaBio – Next Steps in Regulation. 40th Ordinary Meeting
of the Sugar and Alcohol Production Chain Sectoral Chamber.c)
Official Gazette of the Union, National Energy Policy Council –
Resolutions No. 5, June 5, 2018 and Resolution No. 758, November
23, 2018.d) Embrapa (2018). Technical Note – RenovaCalcMD: Method
and Tool for Accounting the Carbon Intensity of Biofuels in the
RenovaBio Program.8 Although there is no restriction on the type of
buyer eligible to purchase CBIOs, it should be noted that,
according to Brazilian Law No. 13,576, it is mandatory for fossil
fuel distribution companies to buy CBIOs to meet their
decarbonization targets.9 Assumptions: 31.193 million liters of
ethanol produced per year (Source: Data from the Sugarcane and
Bioenergy Observatory - UNICAdata - which provides historical data
on ethanol production by raw materials, sugarcane and corn for the
2022/2023 harvest). Dosages of 100 and 200 kg of K2O per hectare,
respectively, for corn and sugarcane. Assuming the average yield of
4,025 liters per hectare for corn and 8,100 liters per hectare for
sugarcane. Demand for 7.71 million tons for K Forte (10% K2O) and
1.28 million tons for KCl (60% K2O).10 CBIOs average price from
December 01, 2023 to May 31, 2024 was 102.92 Brazilian Reais
("R$”). Source: B3. Currency Exchange Rate: C$1.00
= R$3.65.11 R$30.9 million. Currrency Exchange Rate: C$1.00 =
R$3.65.12 Standard profile for biofuel production: an option in
RenovaCalc for biofuel producers or importers, which includes the
technical parameters related to the production of energy biomass,
pre-filled with data that reflects the average production profile
in Brazil, with added penalties. Source: Official Gazette of the
Union, ANP – Resolution No. 758, November 23, 2018.13 Based on the
average car emitting about 4.6 tons of CO2 annually.14 Sources:
https://www.gov.br/agricultura/pt-br/assuntos/sustentabilidade/planoabc-abcmais
and
https://www.gov.br/agricultura/pt-br/assuntos/sustentabilidade/planoabc-abcmais/abc/programas-e-estrategias15
Source: https://unicadata.com.br/listagem.php?idMn=15816 Source:
Data report on the sugar energy sector in Brazil and its economic,
environmental and social impacts (from Portuguese “Fotografia do
setor açúcar energético no Brasil e os benefícios econômicos,
ambientais e sociais gerados”), Brazilian Sugarcane Industry and
Bioenergy Association (Unica).17 Source: Brazilian Sugarcane
Industry and Bioenergy Association (Unica)
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