INTERVIEW: Galvani aims to increase production in Brazil by 20% in 2025: CEO

Brazilian fertilizers producer Galvani expects to increase its phosphate production by 20% in 2025 while strengthening its operations with new investments in the country, amid a dynamic international scene that could "rebalance" trade flows, CEO Marcelo Oliveira Silvestre told S&P Global Commodity Insights.

Back from the Fertilizer Latino Americano Conference 2025, which gathered hundreds of industry participants in Rio de Janeiro from Jan. 26-29, he received Commodity Insights on Jan. 31 at his São Paulo office to discuss the company's plans for the year and the opportunities ahead in the "promising and more competitive" Brazilian market.

Galvani will remain "totally focused on the local market," specifically in Matopiba, the prominent agricultural region along the Northeastern states of Maranhão, Tocantins, Piauí, and Bahia, where its facilities are located and it stands as a dominant player.

The company expects to "increase phosphates fertilizers production this year by 20% over the current 700,000 mt" it produces at the Luis Eduardo Magalhães plant, in Bahia, which is based on its mining facility located in the same state, Silvestre said.

Besides the ongoing plant growth, Galvani is developing a mining project in Irecê, also in Bahia, which will "support the planned expansion." The latter has a projected annual output of 350,000 mt of phosphate and 600,000 mt of agricultural calcareous, Galvani's CEO explained.

Both initiatives are part of the company's plan to double capacity started in 2022-2023, part of which involves an investment that will be around Real 1 billion this year (around $173 million dollars at the current exchange rate), Galvani's CEO estimated. This stage aims to be concluded "in Q2 2026" and "take production capacity to 1.3 million mt of fertilizers by 2027," according to Silvestre.

Increasing competition

The expansion is in line with the government's National Fertilizers Plan, which aims to reduce Brazil's dependence on imports from 85%, currently, to 50% by 2050.

A growing business should bring more competitors to the local market, but "there's room for everyone," Silvestre said, confident of playing the match at home, even with competitors like global producer Mosaic building a new blending plant in Tocantins.

"This is a big, growing market. Competition will exist ... I see it with great calmness. It's important to differentiate our products from imported ones, understanding the market while being in the market," Silvestre said.

"We see an opportunity for us. We have been in this market for more than 50 years, so we know the need for farmers in the region to develop new products, and we see that as a competitive advantage," according to the CEO.

When asked about the possibility of Galvani establishing in another market, its CEO said, "We still have a lot to do in the local market."

Another initiative, also in the line for 2025, is the Santa Quitéria long-standing mining project in the state of Ceará, in the Northeast region, which is now being analyzed by the Brazilian Institute of the Environment and Renewable Natural Resources, or IBAMA.

The issuance of the authorities' license is expected by the fourth quarter, allowing for project development in 2026-2027 and ramping up operations in 2028. "We believe that IBAMA will grant that license, as the project is very well studied and meets all the necessary conditions for implementation," Silvestre said.

The site, to be exploited jointly with the state-owned Nuclear Industries of Brazil, contains 99.8% phosphate fertilizer and 0.2% uranium. According to Silvestre, the investment involved is between Real 2.5 and 3 billion.

With the phosphate from Santa Quitéria Galvani "will produce one million tons" of fertilizers, and 200,000 mt of tricalcium phosphate for animal nutrition.

Yet, Silvestre said, "licensing is one of the pillars" Brazil needs to strengthen to improve the business environment for fertilizer development.

Another key point he noted is taxation, as a regulation aimed at providing equity between domestic and imported fertilizers in Brazil, as it is set to expire in 2025. "We believe common sense will prevail, and it will be renewed to keep the fertilizer industry competitive," he stated.

Economic challenges, global trade troubled scene

Even while projecting strong demand and expanding agricultural activity, Silvestre recognized challenges in the local economy. "As a company, if we look at the short term, investment becomes difficult. Brazil is dealing with high reference interest rates (13.25%), which makes it challenging for entrepreneurs to invest. On the other hand, we need to find a way to make this happen," Galvani's CEO explained.

"In the medium and long term, it is a very promising market with opportunities. In that timeframe, we need to address Brazil's issue of import reliance, supporting the National Fertilizer Plan."

Asked about the judicial recoveries that have multiplied among several firms in the agricultural sector, Silvestre expressed optimism that the sector will overcome the current credit issues, viewing them as a "short-term issue" until stabilization occurs.

All the challenges in Brazil take place in a troubled international landscape, with the US announcement of new tariffs on Canada, Mexico and China, and the potential for the European Union to impose taxes on Russian fertilizers.

"If you remove the best competitive scenario and introduce one that may incur higher costs, it will lead to a bit more inflation. This can have an impact, but no one will run out of products. Ultimately, like the Covid crisis, everything will rebalance," Silvestre noted.

"We must always remain vigilant as a business and as a country (...) This situation will present some challenges in the short term, but also opportunities, as the world is reconfiguring" trade flows, the CEO said.