Food security and the Sustainable Development Goals (SDGs) play a crucial role in shaping our global future. By 2050, the world’s population is projected to reach 10 billion. To meet this growing demand, we need to produce more food.
The UN’s SDG 2 aims to end hunger, achieve food security, improve nutrition, and promote sustainable agriculture by 2030. Food security is intertwined with economic stability, social well-being, and environmental health.
MINBOS Resources publicly listed on the Australian Stock Exchange is on a mission to create a high-impact and sustainable nutrient business in Angola and the broader Congo Basin. Their vision is to build a nutrient supply and distribution business that not only stimulates agricultural production but also promotes food security in the region.
MINBOS is developing the Cabinda Phosphate Project to locally produce and supply fertilizers. The project is situated in Cabinda, Angola. The geology of the region plays a crucial role in phosphate extraction. The Cácata Resources are a key focus, contributing to the overall resource base.
The base case estimates a post-tax NPV of $203.2 million and an Internal Rate of Return (IRR) of 39%. Payback Period is just under five years. Average Yearly Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is approximately $55 million.
The Capanda Green Ammonia Project is another critical initiative, aiming to enhance nutrient availability. It is based on a contract with the local hydropower company to source emission free electricity at one of the lowest costs in the world.
The economic NPV (net present value) of the Capanda green ammonia project is not explicitly stated however, based on some assumptions and calculations, it can be estimated as follows:
The capital expenditure of the project is $365 million. The project will use 200 MW of hydroelectric power from the Capanda dam to produce 320 t/d of green ammonia. The green ammonia will be used to produce 730 t/d of low-density ammonium nitrate for mining explosives, and 980 t/d of calcium ammonium nitrate for fertilizer.
The price of green ammonia is assumed to be $500/t, based on the average of recent projections. The price of low-density ammonium nitrate is assumed to be $300/t. The price of calcium ammonium nitrate is assumed to be $200/t. The operating cost of the project is assumed to be 30% of the revenue, based on a typical industry benchmark. The discount rate is assumed to be 10%, based on the average cost of capital for similar projects. The project life is assumed to be 25 years, based on the duration of the power supply agreement.
Therefore, the estimated economic NPV of the Capanda green ammonia project is $1.46 billion, which indicates a high profitability and attractive project. However, this estimate is subject to various uncertainties and risks, such as market fluctuations, technical challenges, environmental and social impacts, and regulatory changes. Therefore, a more detailed and comprehensive feasibility study is required to confirm the viability and sustainability of the project.
Nevertheless, if MINBOS Resources can maintain its schedules and attract the necessary finance; it could combine making a huge long-term impact to food security, sustainable development goals and significant shareholder profitability.