new rock phosphate investment by mosaic

1 April 2010
Mosaic announced that it has reached an agreement with Vale and Mitsui to acquire a 35% economic interest in Bayovar for $385 million. Bayovar is a phosphate deposit in Peru that is being developed as a rock mine by Vale and is scheduled for start-up during H2/10. Designed annual output is 3.9 million tonnes with an expected life of 27 years. At first glance, the purchase price appears to be rather full. However, we suspect that Bayovar''s development costs may be higher due to added infrastructure related expenditures for a 40-km road, 5-km conveyor, marine terminal and desalination plant. In aggregate, the consideration implies an overall value of $1.1 billion for Bayovar''s 3.9 million tonnes of annual production ($282/tonne). The agreement also provides Mosaic with an off-take for 35% (1.37 million tonnes) of Bayovar''s production to be used in Mosaic''s global operations.