MBAC is a publicly traded Canadian corporation listed in the Toronto Stock Exchange under the ticker ‘MBC’, and has a market cap of C$233 million ($239 million). MBAC was founded in 2009 and is currently engaged in activities relating to the mining, exploration, extraction and processing of phosphate rock. MBAC’s main asset is the Itafós project, where phosphate rock is currently mined, milled, processed and sold to local farmers for direct application. MBAC has also some smaller properties in the Brazilian coast focused on the production of potash.

The total project is estimated to cost $257 million. IFC proposes an A Loan of $40 million to Itafos, as well as a $35 million investment in the shares of its parent, MBAC.

75.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity	35.0

* These investment figures are indicative

The project is located in the municipality of Arraias, southeast of the State of Tocantins in Brazil, nearing the border with the State of Goiás. Even though the project is located in the municipality of Arraias in the State of Tocantins, the nearest community to the project located at 7 km is Campos Belos (19,000 inhabitants), which is in the state of Goiás.

The project will support the further intensification and expansion of agricultural production in North Eastern Brazil, the Cerrado, by making available SSP fertilizer closer to market. Given Brazil’s already important role in supplying global agricultural markets and its significant potential for converting soil into arable land, the further development of the Cerrado plays an important role in promoting global food security, to which this project is making a contribution. Specifically, the expected development benefits from the project will be in the form of: Development of regional fertilizer capacity in a growing market that relies on imports and domestic supply from producers which are located at a distance. Greater production and supply of SSP in the region supports the expansion and intensification of agricultural production and creates some degree of independence from imports with the positive effects overall of reduced transportation lag times and lower price volatility. Expansion and intensification of agricultural production in the Cerrado, which has become the breadbasket of Brazil. Further intensification and expansion of agricultural activity depends on the availability of Single Super Phosphate (“SSP”), a source of sulfur and key ingredient to turning the sulfur deficient soils of the Cerrado into arable land. Job creation in an isolated area in the poorer northeast of Brazil with few economic opportunities. Revenues to government through corporate income taxes. The following development indicators will be tracked throughout the project: i) payments to government, ii) jobs during construction and operational phase, iii) domestic purchase of goods and services, iv) community development outlays.

As a junior company, MBAC has approached IFC to support its objective to become a regional, integrated fertilizer player in Brazil. IFC’s additionality and expected contribution to the project and the company is through: Provision of long-term financing: Commercial, long-term debt for project finance is difficult to obtain as Brazil is still in the process of building robust markets for long-term finance. IFC provides access to finance with longer tenors than would ordinarily be available from commercial lenders to the Company. Environmental and Social Expertise: The client is committed to high E&S standards and values IFC’s advice on environmental and social management. The client has expressed a particular need for support in managing community aspects around the mine and the nearby town of Arraias. Technical Expertise and Global Knowledge: While the client has a strong and experienced management team, the client values IFC’s advice on project management and other technical aspects of the project. In addition, MBAC is exploring potential phosphate reserves in Western Africa and seeks IFC’s assistance.

Key environmental, social, health and safety issues associated with the project include the construction of a water and a tailing dams, the resettlement of up to 49 families, industrial operation impacts, flora and fauna impacts, and the risks associated with the mining operations. To assess the environmental and social impacts and identify mitigation actions, the Company commissioned an EIA and accompanying E&S management programs frameworks with which it obtained the construction license from the Brazilian environmental authorities. As part of the Brazilian approval process, Itafos conducted a public hearing with the community of the municipality of Arraias to address concerns of the community regarding the project.

As part of this project, Itafos completed an upgraded Environmental and Social Impact Assessment where it addressed all known potential impacts during construction, operation and decommissioning phases in accordance to the IFC Performance Standards. Itafos is committed to mitigating the additional potential impacts to be identified once the final project design is completed.

The construction program will also provide much needed positive benefits to the local population in relation to jobs and training.
Once in operation, the Project will be a state-of-the-art facility that will utilize best available technology.
Information about potential environmental and social impacts and how they will be addressed by the company is summarized in the Environmental and Social Review Summary.