Hello, everyone. My name is Cristiano Veloso. I am the Founder and CEO of Verde AgriTech. We will be presenting today the results for our Q3, and at the end, we will be carrying out a questions and answers. If anyone would like to send questions, please use the Q&A option at the bottom of your screen. If you're watching this presentation on YouTube, please share it with other investors or other stakeholders or other people potentially interested in sustainable agriculture, carbon credit, fertilizers. By sharing and clicking that Like button is how you tell the algorithm at Google, YouTube, that some other people like-minded might be interested. So thank you for that. As we begin the presentation, in the next slide, I would like to remind you that this presentation contains some forward-looking statements. The actual results might be different.
I would remind you about our very consistent disclaimers throughout the last few years. It is and will always be a risky investment in terms of being, in terms of being a, a company developing a market, introducing new products, introducing new technologies. So do, as usual, pay attention to our disclaimers. Next slide, please. If you're in North America, if you're in the U.S., if you're in Canada, you have the opportunity to go on Amazon.com and order a bag of our products. If you like it, also, please leave a review after you've experienced our product. Next slide, please, Lucas. Next one. So, the presentation today, I'm here in Brazil with Lucas Brown, our VP of Corporate Development. I'm here with Felipe, our CFO. We're all here in the same room.
I will talk a little bit about the market, what's been happening in Brazil, why this has been such an atypical year. And then afterwards, Lucas will briefly talk about carbon, the carbon opportunity, what we're doing, what we're excited about. And then Felipe will address the details of our financial results. At the end of the presentation, I will carry on with the Q&A. Next slide, Lucas. So, the reason this year has been very atypical started happening last year. Last year, we had farmers in Brazil who were very bullish about results, about yields, about everything else. So they're looking as they were planning to plant, planning the season last year, they were looking at very strong prices for every single agricultural commodity. So they have very strong prices for soybeans, coffee, corn.
Because the price was so strong, and the macroeconomic environment suggested those prices were gonna either remain strong or potentially go even higher, they took more risk. So there was very little hedging done. By hedging, I mean, it's when you sell your future production. Now, you bring the money in the treasury now, rather than wait until you harvest to sell your product. So it's commonly available to farmers, and usually they will hedge to mitigate their risks. But because of what the environment was like last year, there was very little hedging done. And not only there was very little hedging, what they did at those very bullish prices, very strong prices for corn, coffee, soybeans, everything.
They're also very confident in buying very expensive fertilizers, herbicides, pesticides, seeds, biologicals, everything was bought last year at record prices. So in the next slide, you can see potash prices at record high prices last year when farmers were buying it. You can see the price for urea equally very high, and farmers were buying it. You can see the price for MAP equally very high, and farmers were buying it. So all of that, all of the commitment made by farmers was at high cost, and they were bullish because equally, the commodity price were high, very high. So everyone was expecting to make a lot of money last year in the farming space. The year progressed, if we go back to couple slides, Lucas. Not, yes.
But as the year progressed, it didn't go as farmers expected. The contrary happened. Instead of an appreciation, there was a steep depreciation in the prices for agricultural commodities. We saw what happened to soybeans, what happened to coffee, to corn, and that depreciation was even sharper when it got to the point in time where farmers had no choice but to sell what they had harvested, so they could pay for that very expensive debt they had contracted when the market was very positive, when they were, they were planting. So they had to liquidate for whatever price was being offered. This is obviously the worst combination one can expect, you know, big debt, high prices, low to decline in prices, and that led to a massive squeeze in their cash position.
So when it came to them, for them to plan and develop and plant for this year, they had very little choice in terms of which inputs they could or could not buy. They had very little purchasing power to decide what they would be buying. For that reason, they ended up buying most of their inputs from, one, companies that could offer very, very competitive terms for funding those farmers. Two, a lot of it was traded via traders. So the traders, the grain traders, had a phenomenal year, because if you look at this steep decline, the traders, they probably or certainly anticipated that, so they were able to sell coffee at current prices because farmers didn't hedge, but the traders were in the market.
Then when it collapsed, they could offer inputs at prices which were very competitive for the reason, doing something called barter, which is when you accept this payment, grains rather than cash. They were bartering because they had already pre-sold the grains they were getting then at much higher prices. So they also did very well. People could offer those interest rates very high, good terms, people who could have the good terms from bartering and locking up grain prices. Then the third group that also managed to sell were the big co-ops or the players that had already some sort of collateral from the debt.
So for example, if the farm had already committed its farmers guarantee with a certain player, that player had a lot of leverage over the farmer to be able to sell everything the farmer needed that year. So it was a very atypical year. And the situation kept deteriorating as the year progressed. This obviously has impacted Verde, as you can see, but it has impacted most of the companies operating in the same space, most of the companies selling inputs. And it wasn't, it most certainly wasn't something that has only impacted us. If we move to the next slide, Lucas, please. So next one. Next one. And this is, again, another slide that illustrates how the cost of lending was very very it had a massive impact on farmers.
Because when they came back, when they had that cash flow squeeze and they came back to fund this year's planting season, they were hit at very high interest rates, much higher than what had been in the last five years. So that made the situation even, even worse for them. Next slide. Okay, so, those were the bad news, and, a lot of it we had already been talking about throughout the year. A lot of it, everyone could see happening from, from monitoring commodity prices, fertilizer prices, activities, looking at all the company's results as well. And, and so I'm sure to a lot of you, this isn't, this isn't the new information.
What we're seeing now, which can make us cautiously optimistic, and the reason I say cautiously optimistic is because, there's some weather issues going on, which might have a negative impact as well. But at the moment, we've seen a stabilization of fertilizer prices after the very sharp decline. Reading reports from other analysts, from the state, other market commentators, I haven't come across anyone saying prices will continue dropping, next year. Agricultural commodity prices are leveling as well, and, very importantly, farmers hedged way more this year than they did last year. They were far more conservative in terms of speculating, and we will expect better balance sheets for next year from farmers in comparison to this year.
This year, there were several customers, we just wouldn't be able to sell to them again because their credit risk went up a lot. The decrease in the Brazilian interest rate has been accelerating, and the current governor of the Brazilian Central Bank has already made a public declaration saying he expects two for the next two upcoming meetings, for you to have another 1% drop among the two of them. And we see a growing interest on, on sustainability, we see a growing interest on climate change. So our product is, is when you compare it against conventional potash, it's something that is, is for all those reasons which you're very familiar with, it's much more, in line with, with the new times we, we live in.
So I think that's a little bit of the update in the market look for. You and some of you who have been familiar with all those presentations over the years and all those conversations. Obviously, you know, it has hit me. You know, you would expect me to be here, jumping and giving a full bullish presentation because it's been tough. It's been tough year for everyone. And we just expect that things will look much better, and we will carry on working very hard. So in spite of all the negatives, we can carry on growing the company to its fullest potential. We have a new senior management team. We have Lucas here because Newton Nagumo, our Chief Marketing Officer, is in the field.
We have Gilson, likewise, working very hard with our sales team to make the most of this year. When we look at our guidance, we're working to try to get as close to it as possible. But I... There's no doubt, I feel it's gonna be difficult hitting that guidance. We had strong hopes that Q4, with a new team and perhaps the stabilization of fertilizer prices, very strong hope things could recover. But it's not what we're seeing. And that doesn't mean we will give up. We won't let the team give up.
We won't let our new senior management team give up, and we will carry on working as hard as we've always been to try to get at this point of time, as close to it as possible. So I will stop here, and I will let Lucas Brown talk about the carbon capture. A little bit of an update, what we're seeing, what the opportunities are in terms of monetization. And it's something that whenever I talk to investors from this space, whenever we talk, I was at a conference in New York last week, which was an agritech conference, and there was a lot of interest in this, in the carbon.
You see some raises going on, and you see some catches going on, and you see some companies showing up, and it's something, there's no doubt we're witnessing here when it comes to permanent carbon removal, i.e. technologies that can permanently remove carbon from the atmosphere. Different to the first wave of carbon credits, which was focused on temporary removal or carbon removal with a very high risk of what the industry calls leakage. For example, planting trees with the risk of wildfires, transforming that all back into carbon. So we see this whole carbon removal, permanent carbon removal, birth of an industry, direct air capture with biochar, with what we're doing, as something very promising, especially when you see the backing of Microsoft.
So it's something very exciting as well, and we're very happy that we hope to be benefiting from this new industry in the years to come. There's a very interesting article by The Economist a few months ago, talking about the carbon removal industry being worth $1 trillion and with the fundamentals why that is the case. Strongly recommend everyone have a look at that paper. So I'll stop here and let Lucas carry on. Thank you, and I look forward to answering all the questions at the end, after Lucas and Felipe have spoken.
... Thank you, Cristiano. It's a pleasure to be speaking to you again today. I've only participated in one conference so far, which was in the Investor Day last month, and it's great to be speaking to you again. Just a reminder that within my scope of work, I'm also responsible for investor relations as well. I'd love to be able to speak to you individually. The email is the same at investor@verde.ag. If you have any further doubts after this session and you'd like to jump onto a call with me, it'd be a pleasure.
So just continuing from Cristiano's speech beforehand, and allow me to be a bit more excited and bullish in terms of this specific project, 'cause we have been communicating quite consistently and giving a lot of clarity in terms of our plans, in terms of carbon capture. So as we've been discussing before and showing before, the potential of carbon capture with our product, K Forte, is 120 kg. But now that we have launched and published our LCA, our life cycle assessment from cradle to gate, the calculation of our incredibly low emissions of our mine and production plant makes it that the potential for carbon capture from our product is 112 kg. And this is mainly due to the sustainable processes and incredibly efficient processes within our plant.
So an example of this is clearly 100% renewable energy from hydroelectric sources. So, going into a bit of detail, specifically of the outlook for what we're working on this year. So up until Q3, we've applied 323,000 tons of our product, and this gives us the carbon capture potential of 30,000 tons of carbon. However, given our LCA publication, now using specific data on our production, our energy, and our transport, and shipping, and with the application, this gives us the opportunity of monetizing 20,000 tons or almost, almost 21,000 tons of carbon. And given the difference, quite varying prices within the market, all the way from $138 to what we've seen also in terms of, above $550.
We are working with those specialists in terms of understanding exactly what the quality is and how we will be able to market our carbon credits to potential buyers and offtakes. This is clearly one of the key priorities of the company at the moment. In terms of next steps, quite happy to be able to let you know, give you a bit of a sneak preview at the moment, but we'll be sharing very soon in our press releases, our updates in terms of our MRV. That's measuring, reporting, and verification. We have already started not only controlled tests, but also in-field tests with a recent visit from our scientific advisor, Dr. David Manning, from the University of Newcastle.
Furthermore, we'll be very pleased to share very soon a new study that compares the carbon footprint of potassium chloride, the real carbon footprint of potassium chloride, compared to our product, which of course is produced in Brazil, in Minas Gerais, very close to the majority of the main locations of agriculture in Brazil, where we would be able to offer our clients, as Cristiano was saying just before, these clients that have much, much strong commitments in terms of sustainability, in terms of their own carbon footprints. We can offer our product in terms of being a much lower emission product and being able to support our clients' commitments in terms of decarbonization, while also delivering a much better quality product without chloride, without salinity as well.
So we're very, very bullish about the next steps, and, and hopefully we'll, we'll have some very interesting news to be able to share with you soon. The other thing that I'd like to share also is that we're planning to hold a specific conference call on the carbon project, carbon capture project, in the beginning of the new, the next year, in the new year. So I hope that anyone who has specific questions on this and would like to go and delve into a bit more detail in terms of our timeline, in terms of all the actions that we're taking on the carbon project, we'll be able to have a specific call, potentially already in Q1 2024.
We'll, we will be able to take all of your questions and delve into a bit more detail in terms of what the plans are and, of course, any updates that we might have by then. I think I'll stop there, and if there are any questions at the end, I'll be glad to take you. I'll pass on to now Felipe, our CFO.
Thank you, Lucas. I'm presenting now our Q2 results and a few numbers, P&L, and a few analysis to help you to understand a bit on the results that we've delivered. And the first we related to cash position, the group held a cash position on Q3 of $9.3 million compared to $5.1 million last year. And cash utilized from investment activities decreased from 104%, and also we had a very high expenses last year related to Factory 2 , Plant 2 , and this year, of course, we did not have all these investments. So the key point now is to hold a bit of cash on hands and try to improve our financial availability.
In terms of bank loans, the group has successfully secured a bank loan of $12.4 million in Q3 2023, and also $5.4 million in October and $4 million in November. These funds raises will be basically used to replace existing debt that we are at higher interest rates and also provides the group with more favorable terms and also related profitability. We sold 180,000 tons in Q3 2023, compared to 189,000 tons last year. Revenue was $9.4 million compared to $27.3 million in Q3 2022. EBITDA before non-cash events was -$600,000 against $28.1 million last year.
Net profit was $3.5 million compared to -$6.5 million last year. Total non-current assets of the company were $667.3 million compared to $55.8 million in Q3 2022. Please go ahead, Lucas. On the financial statements, we can see first chart here, we have the P&L and also starting with the revenue. We can say that the decrease was significantly basically because of a lower price and also lower volume, as was already presented by Cristiano related to market outlook scenarios. Related on gross margin, it remains in a high level, but basically, and mainly, we can see in the next chart later that it's mainly driven by freight expenses that has an impact here as well.
But on a positive way, we can see some reduction on expenses. It also is something that we've been working on in the last five to six months or beginning of the year, trying to cut some costs, expenses, everything that's not necessary to leveraging our profitability. We can see as well what also is impacting us a lot this year is that we have $2.6 million on depreciation that we've removed here from this analysis, but in the financial statements of the company, it's included as non-cash and depreciation. Well, and then at the end of the day, you had a negative net profit of $3.4 million compared to a profitability of $6.4 million last year, 2022.
Year-to-date basis analysis, we are also negative in net profit, $3.3 million, compared to a profit of $19.1 million last year. The next chart, Lucas, please. We can see here the information divided per ton. We can see in the first table the information, including freight. And since freight expenses or revenue is quite relevant, we had the second table the numbers excluding this impact. So we can see that gross profit went down from 78%, including freight, to 60.7% this year, and then excluding freight, it also went down from 66% to 44%. But on the other hand, we can see that we had a production cost also lower than prior year.
This is mainly driven by lower bag sales and also a bit on big bag sales. And of course, including Plant 2, which is the key part here, since Plant 2 is much more—it's cheaper to produce than Plant 1, and all the product that is considered bulk product is being sold throughout the Plant 2 at this moment. Next one, please. On sales, general and administrative expenses, we can see that the total sales expenses had a relevant decrease. We had here an impact that was the fee paid to sales agents that we had besides the lower volume, lower price; we had also a provisional reversion last quarter. But also we had a relevant reduction on sales and market expenses in the period due to the actions we've said before.
On general administrative expenses, the key point I'd like to highlight here is the debt, debt provision, that for the first time it's impacting us with a relevant number of $563,000 in the period. So once we exclude this from general admin, we can see that the costs were a bit high, higher, but not much higher than the last year. On other expenses as well, we can see that there was a significant decrease on legal, professional consultant expenses due to last year, we had the relocation of our headquarters from U.K. to Singapore, what increased also some expenses last year that did not happen this year again. And next one, please, Lucas. A bit on logistics and sales mix.
We can see as well that, the volume sold as CIF, remained stable year-on-year with 78% in both periods. But on the other hand, the product freight per ton reduced significantly. This was mainly due to mix of sales. We sold more product closer to the factory, which has a lower cost per ton, and this impacting in less expenses. In the right side, you can see the sales channels. We've lost a lot of percentage in distributors, went down to 2% this year only compared to last year. In the other hand, we had an increase in our direct sales, which are sales made by our employees, full-time employees. And the next one, please, Lucas.
On the loan side, as I've mentioned before, you can see that in Q3, we recorded the cash of $9.2 million, also on the trade receivables totaling over $16 million, and this will provide available support to the company's cash flow. The total net loans in Q3 was $41.6 million, and the company has obtained last quarter, $12.1 million in additional loans, and another $9.4 million already in Q4, replacing, as I've mentioned before, more expensive and shorter term debts to long terms and cheaper ones. We can see also that the cost for the loans currently is close to 16.5%, which we expect to decrease in the coming quarters.
We do expect for the next couple of weeks, another reduction in the interest rate in Brazil of 0.5%, and next year, another 2% around. This will provide us a very relevant savings in interest expenses. Then in the right side of the chart, you can see the decrease projected for the next three years on the debt profile of the company, and also the amortization and the total loans year-on-year in the end of each period. That's it from my side. Now, I will pass it back to Cristiano to hold the Q&A section, and anything you need, I'm here as well to support. Thank you.
Thank you, Felipe. Thank you, Lucas. I can already see here from the questions, there will be some technical questions here for you to answer, Felipe. There's a question here as well on carbon, Lucas, which is directed to you. First question: Any share buyback program in mind in view of such price? The full answer is no. What's the expected debt costs for 2024, 2025 maturities? I believe Felipe addressed that throughout his presentation. Next question: How does Verde plan to overcome the cost of transportation? Lucas, if you share the screen again, there's a slide there in the appendix where it shows the...
If you keep going down, where it shows the two slides there, which I think are very important to understand the important, like, the location and where it's more competitive, and the size of that local, more competitive market. There you go. So of course, we can see from that darker reddish, greenish color, that's where we can get the best freight rates. Historically, we've been less targeted in terms of sales and more focused on national expansion. If you look at the distribution of our customers, there was a growth which was pretty much in line with where most of the demand was coming from. This map shows the size of the market, depending on potash prices as well, gives you a good idea.
One thing we will be doing for next year is, and have already kind of like, started doing that, is to focus more where we're more competitive, to focus more where we have better margins, to focus more where we can make more money per ton of product delivered. So that's something, and equally to where we can generate even more carbon credits. So if you look at that, greenish zone, that's where you should see more of the, you know, the focus of our new VP sales, and hopefully, this should translate into better net sales price for next year. The next slide, Lucas, I think it's also important to show, next slide.
Um.
All right. But that's fine. It's, you're gonna have access to this presentation, but the next slide shows the net sales price on each one of those regions, and I think that is quite helpful as well. Moving on to the next question. It's a technical question here for you, Felipe. I'm gonna read the question, and then you can answer. Can you please explain what the $249,000 provision booked in Q2 to fees paid to independent agents comprised? First part of the question, then the second question is: Why was it needed, and why was it reversed in Q3 to generate a $195,000 credit in this expense line? So Felipe?
Yes. Yes, I think I can address two questions in just one. I can see that there is another question later on here that asks how we book or how we expect and pay these commissions. We normally pay it as FOB basis, which means if we sell further from the factory, the FOB price, the final price should be deducted from the logistics cost. So we book the provision for the sales agents as of FOB base. So, this, so if the margin is lower, of course, the commission is lower.
What happened here is that it was not just the specific, the Q2, that provision that was reverted in Q3, but some, some provisions that were made in the prior periods that were overstated, and then we inverted part of it, and this was made in Q3, 2023. For this reason, we can see this, this impact. Thank you.
If any question, anyone feels like it hasn't been properly answered and wants more clarification, just go back to the Q&A and write, "I didn't understand," or "What about this?" We're happy to go over again. The next question is: When will Verde see the carbon credits for ERW? We don't know. We're working as hard as possible to get it as soon as possible. The estimated price, we don't know. We've given a range, which is what we've seen in the market, but at this point, we don't know. There's another technical question here for you, Felipe. So you are depreciating Plant 1 and Plant 2 capital costs on a straight line basis over 10 years. This assumes an equal use of the plant capacity each year for 10 years.
When you only use a fraction of the plant capacity, this methodology generates a very high depreciation per ton. In Q3, this was $9.01 per ton, versus $0.44 per ton in Q3 2022. Will you consider a change for the basis for plant depreciation to address this accounting issue?
Yes, we are working on it. We are reevaluating assets according to the production together with EY's provision, and we expect to reduce this amount of depreciation in Q4 now. So this will be a positive impact, and maybe not very relevant, but yes, it will have a reversion. You are okay. You are right. We are doing this now because we understand that the effect will last more than 10 years with the current production.
Thank you, Felipe. Thank you for the question. The next one: Are your sales commissions and bonus calculations adjusted to take into account the sales that are eventually written off as bad debts? So that's the first question, Felipe. Are your sales commissions and bonus calculations, so it's two answers in one for the sales commissions, the other one for bonus, adjusted to take into account the sales that are eventually written off as bad debts? The second part of the question is: Do they take into account the net profitability of each sales? A sale made to a customer within 500 km is better than a sale. So the second question is the one you answered already. So the second question you answered.
So when an agent gets his commission, if the agent is based next to the mine and our FOB price is higher, he makes more money than an agent who is located, let's say, in Mato Grosso state, and the FOB price is significantly lower than the one next to the mine, then that or the state agent gets paid significantly less than the one who is paid. So this is the answer to the second part of the question. So we have the first part of the question, which is split between sales commissions to independent agents and bonus calculations, which we presume is to, to-
Yeah.
To executives.
Yes. The first part of it, we just pay sales commission after we receive from the client. So once we have a sales made by an agent, for example, November, and payment terms are three months, we had a provision now for the sales agents to pay this commission. However, if next year or February or January or whenever it's due, we do not receive it, we do not pay and reverse this commission. So this is also one impact that we have. And of course, from now on, since we did not have last year end type of bad debt provision, we did not have a historical to this book, to book this.
But from now on, and from 2024 onwards, for sure, we're gonna do this provision on a monthly basis according to the prior year loss. So for example, if you, if I'm including 1.5% loss on bad debt provision, ideally, and according to the guidance and accounting guidance, we will book this provision on a monthly basis from January on, for example.
... Thank you, Felipe. The next question is to Lucas about ERW. Lucas, is there any hint about how long selling carbon credits should take? So you can see if you can give a different answer to mine. Do you intend to sell to bulk credit carbon resellers or carbon credit buyers directly, for example, Petrobras?
So I don't know if I can give exactly a different answer to Cristiano's before, in terms of, not really having a clear picture in terms of exactly how long it's going to take for us to be able to sell it. There are many different moving parts, and of course, we've started our measurement, reporting, and verification. But regarding the second part of the prompt, the question in terms of who we want to sell to, I think there are two main points here. First, is that, of course, we want to sell as quick as possible, but the second one is obviously that we need to, take into account that what we're developing are very high-quality carbon credits. So not only, as Cristiano mentioned before, we're talking about the carbon sequestration is permanent.
The permanence, the units of measurement that it's used in the enhanced rock weathering is 100,000 years, but also in terms of the quality of our reporting, the quality in terms of our product. And so, of course, we are in contact and negotiating with everyone and every, everyone. So whether it's bulk sellers or even specific companies, but really, we want to find not only the best partner on this journey, but also the best prices for the quality of carbon credits that we're offering.
Thank you, Lucas. The next question is: Do you expect provision for bad debt to increase significantly in the next semester? It's a difficult one. It's a difficult one to answer, especially because significant is quite, quite broad, isn't it? I think at the moment, the bad debt provision we have is what percentage, Felipe, of last year's sales? So the $500,000 in bad debt is about 1%?
Yeah, about 1.5%.
It's about 1% of our sales from last year. So I don't know, if you go up to 2%, it's 100%, so I presume this would be something significant. But I don't know. Would you like to have anything to add, Felipe, about what you're seeing in terms of increase and how material that increase could be?
Yes. Since the current situation from our farmers are not that good, as explained, for we are renegotiating from some of them, and extending payment receivables for the next couple of months or next quarters. But yes, I do expect an increase in Q4 now, but not in Q1 next year or Q2 next year. But yes, I would expect something in Q4 this year.
There's an expectation in Q4. That expectation in Q4, how significant is that?
Well, it would be similar to Q3.
Something, something similar to Q3. Not much worse than Q3. Farmers are struggling financially. Felipe was telling the other day about some farmer who came to us and said, "Can I pay you back in five years?" So it's a difficult market at the moment, but it's cyclical. I think that's what we need to remember. It's cyclical. I spoke a few years ago to a farmer, and he was telling me, you know, this gentleman, he's in his late seventies, very wealthy, very successful farmer, and he was telling me how whenever you think about agriculture, you need to think about cycles, about several years.
You can't just look at the one year, either the one year when it goes really good, but equally, you cannot just look at the one or two years it might be going really bad. Look, you need to look at it over time. And what he told me was that that's how he managed to become so wealthy. That's how he made so much money over his life. Because earlier on in his life, he understood the cycle, so he was never too bullish when things were too good. He was always careful, but at the same time, whenever he saw this situation being one of those crises, that was when he was greedy, that was when he was there buying land and investing.
And it was a very enlightening conversation I had with him, and I can't think of a better way to describe what agriculture is than what this farmer told me a few years ago. The other question here is: Are you factoring into long-term growth plans, the likely downward pressure on Brazilian MOP prices from the entrance of a large-scale, low-cost Brazilian producer being given the go-ahead to come online in the next few years? How critical do you think carbon credits could be in competing for major Brazilian market share with this producer? The... Even though it isn't named here, he's talking about a project in the Amazon rainforest...
that has had some regulatory advances and it's a project which I've shared my view on that project so many times, but I wouldn't mind doing it again from a factual perspective. From what I've seen, the price required for potash, for it to be economic, given its capital expenditure, is greater or potentially materially greater than what we see at the moment.
There are some construction hurdles which, to the best of my knowledge, no one has been able to come up with a solution, which includes cutting through the world's largest aquifer, in a forest, in a tropical environment, something which has never been done in potash, which will be the first time, and also how millions of tons will be managed above ground in one of the wettest areas in the world, the Amazon rainforest, until a point in time when there's an expectation for it to be used to backfill a mine, which is also something no one has been doing from a potash exploration perspective. So there's several question marks there.
Even if it comes to production, and even if it is what is projected and what the market size is, in an if scenario, I see very limited impact on what we're doing. So that's my view. And if I had one cent every time I answered this question or mentioned about that since 2008, when that project begun, I probably wouldn't have needed to sell some shares in NPK as I did recently. The second part of the question, which I will answer, but I will answer in a completely different context to the first part of the question. The second part is: How critical do you think carbon credits could be in competing for major Brazilian market share with this producer?
I wouldn't say with this producer, but I would say as a whole. When you think about carbon removal, when you think about the need for the world to incentivize the removal of gigatons of carbon, when you look at the potential market this need can generate, and here I quote again, this publication by The Economist, which suggests it could create a market worth $1 trillion. When you look at that size of that market worth $1 trillion in carbon removals, that's significantly greater than the market for potash. Market for potash, globally, is about $30 billion-$40 billion. So $30 billion-$40 billion from potash versus $1 trillion in terms of carbon credits.
So it's not too, you know, aggressive to say that it could be, if The Economist is right, it could be that the potash industry or the potash market will just be collateral damage in the fight against climate change when there is significant incentive for as much of our 3.2 billion in terms of mineral resources to be deployed to fields as soon as possible, if we are indeed to tackle the crisis with the urgency it requires. So that would be my comment about carbon credits. The next question here is: What is happening with a rail line? Verde really needs it. It's crucial for further growth and competitiveness. There isn't any update on the rail line.
If you see from that appendix, that slide I've mentioned, the nearby market, which is independent from the rail, is a significant multiple to what our production capacity is at the moment. And that is where we can focus, that is where we can get the best next price, and that is where we can get significant economics. One slide we didn't have, we don't have this presentation, but we have in our new investors presentation, and we use that one as well in the Investors Day, is that slide where we show the economics in a very conservative scenario of how much money we can make, how much money we can generate by achieving full production capacity at Plant 1 and Plant 2. It's a very significant number. It's a number we don't need to raise any CapEx.
It's a number that only depends on us executing and growing the market. It's a number that, if achieved, can fund any further expansion exclusively from accumulated cash flow. So this is our target. This is what we're gonna be working very hard to get to that 3 million tons total production capacity as soon as possible. There's no doubt that that 3 million tons, you have the upside of carbon credits, which isn't taken into account on that financial model you can see on the presentation, which is really our focus. You know, you're looking at 3 million tons production capacity, which can be capturing about 300,000 tons of carbon. 300,000 tons of carbon.
If you pick $150 as an average sales of carbon credit, you're looking at $45 million of profits from carbon credits alone on the top of the numbers which are there. It's interesting because the current view from scholars, from experts in Brazil, is that any income generated from the sale of carbon credit is exempt from income tax, is exempt from any other sort of taxation. It's $45 million potentially that gets added straight to the bottom line, on the top, of course, of those other numbers there. This is our focus.
You will hear from us less about building Plant 3 in the coming months, and much more about how our new senior team is executing as fast as possible towards making that 3 million tons full capacity a reality. So that sure will be our focus. Like, there's one other question here, which is about me selling shares. So the question as it reads is, can you please comment the reasons why you are selling shares in the company at these discounted prices? I'm not. So I, the automatic sales shares position program, whatever it's called, stopped as soon as the share price came below CAD 1.50, which was a few weeks ago. So there hasn't been any shares sold at those very discounted prices. It doesn't mean that CAD 1.50 isn't a discounted price.
I'm just saying that there hasn't been any sale underneath that 1.50 price mark. The reasons I'm selling, I don't have a problem going over it again. It will sell over three years. It will sell a very small amount, now it's public, above 1.50. Very small amount. Anyone who did the math saw it was 5% of the daily volume. And it's something that is expected to take place over three years. So, and it's up to about 40% of my shares. And that is the situation there with shares. So I can't see any other questions here. If anyone feels like wants his or her question to be answered again, I'm open to answer it.
I don't know if Felipe or Lucas would like to add anything else? No. Okay. I would like to thank everyone for joining our conference call today. It's been a very difficult year. We're here on the 22nd of November. It's been a very tough year for everyone. It's good there's a new team, full of beans, full of energy, which freshly joined the company not so long ago, and is doing everything they possibly can to keep our business growing. So thank you again, and I look forward to talking to you again in the new year with this exciting event Lucas will be putting together exclusively on carbon capture.
Even though we won't be talking here on a conference call, as Lucas expressed, there's some interesting news we're working on in terms of carbon credit, which we hope to be updating the market soon. The carbon avoidance product credentials Lucas has mentioned, it's something very important nowadays. Companies are under a lot of pressure to reduce their own emissions. So by proving how much carbon can be avoided by replacing KCl with our product, that is something very important, something we will be working on in parallel to our ERW and the other one he mentioned in terms of measuring, reporting, verification, something very thorough, which was conceived and implemented with the assistance of Professor Dave Manning.
Thank you very much again, and I look forward to talk to you again with results the next quarter or earlier in the Q in the, in the carbon event. Thank you. Bye-bye.