Everyone, welcome to this very special conversation today on some major news we announced to the market earlier on. It is a big day. It is a very big day after about 22 years leading the company. I am very excited and very optimistic about what is to come and about this next leg of growth and development that Verde AgriTech should start now, led by Herbeth Machado, who is attending this call with us today. Joining him, we also have the rest of the senior leadership with Felipe Paolucci, our Chief Financial Officer, who has been with us for 8 years. Elton, who is our Mining Director, who has been with us for 7 years now.
With Edson Santos, our Production Director, who has been with us for 15 years now, and also our Chief Revenue Officer, Marcus Ribeiro, who has been with us now for 3 years. The team is here, and it's a team I am very excited about their capability to carry on growing the company. I've been talking to a lot of investors already. I've been answering a lot of questions, and I want to make it very clear to everyone who is in this call, I want to make it very clear to everyone who's going to be watching it later on YouTube, that I'm not going anywhere. I'm still going to carry on supporting the team. I'm going to be carrying on supporting our development, and I will make sure that we continue to deliver on our expansion growth as a consultant and as a shareholder.
I believe I'm still the largest shareholder in the company. Unless someone has been buying for the last few days and hasn't done any filing yet, and I intend to continue doing so. I have no plans whatsoever selling any single share and have every hope, every expectation that we will be able to overcome this challenging time that the agriculture sector in Brazil has been experiencing. I believe that today's announcement is a very important movement towards addressing some of the opportunities that this market should be offering us. For several years, as you know, we've been doing significant agronomic trials development, scientific development with different research institutes. Also with some of the country's largest agricultural producers, large corporations, which collectively would represent a total consumption of our product exceeding 20 million tons of products per year, 7 times more than what we're capable of supplying.
The problem with large corporate growers is that they take a long time to make up their mind, and they need to see a lot of validation. The also good news is that once they switch, it's sticky, and it's hard for them to go back. That's why it takes so long, and we understand how important this process is, and that's something we've been very diligent and worked very carefully with some of the leading experts in the country and the phenomenal technical team we have in Verde AgriTech with numerous PhDs and masters and doing a brilliant, phenomenal job. The reason this is so important, because the gentleman I'm about to introduce you and let him talk a little bit to you, Reberth Machado, he is an insider. He's an insider from this world.
He's a chemical engineer, and he run one of Brazil's largest ethanol companies, one of the largest sugarcane producers, and as he will be sharing with you later on, he actually suffered as a CEO some of those problems, some of those issues most of you are familiar with, which are consequence of the usage of potassium chloride in large scale agriculture in Brazil. Not only from a personal experience, but he's an insider in this corporate world, and he will be leveraging not just the relationship, but the mindset and all of the experience he had being on this other side of the table to guide us through this commercial development. We have very big hope that now we have a very large plant capable of producing with very competitive cost. We have years and years of technological development with strong technical validation in those crucial industries.
Now with Herbeth, we will have a new CEO who is going to be moving to Uberlândia, which is the agricultural capital of the Cerrado region, inserted in a region where the consumption of our product would exceed 5,015 million tons, most importantly, where about 80% of all of Brazil's eucalyptus, large-scale rose, and sugarcane production takes place in a 3 to 400 kilometers radius. He's going to be there living, breathing, and in this next journey of his life, making sure it is going to be extraordinarily successful. We really trust he will deliver that. We're very excited. After this introduction, I will ask Herbeth a few questions. I will allow him to introduce himself. At the end of today's call, I will also be taking questions from you, from the audience.
If there's any question you want to send, there's the usual Q&A button, just write it down and I will try to answer as many questions as possible. Most importantly, I will allow Herbeth to answer some of the questions if he's up to speed on them also. With no further ado, Herbeth Machado, it has been a joy to meet you now over six months ago. We went through a journey where we spent several hours together, where he got to meet our senior management team and spend time with them. He got to visit all of our operations. He has a lot of strong connections, as you may expect, in the Brazilian agriculture and distribution sector in Brazil. He also got to do a lot of due diligence, a lot of conversations, talk to some of our customers.
It was a long process and I'm very pleased to have him. Herbeth Machado, welcome to Verde AgriTech, and please introduce yourself. Please tell a little bit about yourself, and then I have a few questions I'm going to be asking you.
Well, thanks a lot, Cristiano. Thanks for the introduction. I'm going to try to keep it short because you did a fantastic job in introducing myself. Basically, I'm a chemical engineer. I have more than 25 years of experience in the agricultural sector in renewable fuels. I was born and raised in Brazil, but moved early on in my career into Canada, where I pretty much developed my career here, working for many different sectors, from pharmaceuticals to oil and gas to energy, engineering. Later on, I moved back to Brazil and I was in charge of one of the largest ethanol and sugar mills in Brazil, where I spent 12 years, and ended up becoming the CEO of the company. So I know the drill, I know what the challenges of a fertilizer is, especially for a sugarcane culture, let alone the other cultures.
My family background is into farming. My dad has been a farmer since I was born, so I know the drill a bit. I know the major players in Brazil. I got some strong connections that I have to revisit them because I've been away from Brazil for the last four years, but I don't think that's going to be a challenge. It's just a matter of to be there, like Cristiano mentioned. I'm moving back to Uberlandia because I want to be there. I want to be the new face of the company. I want to be meeting the major clients, introducing myself to the other institutions or big corporations that might be able to use our products. I'm really excited about the opportunity because I see Verde as a great company. Great product, has a great potential for carbon capture, which potassium chloride doesn't have.
We're going to talk a bit more about the challenges that potassium chloride provides to industrial setup later on. I'm really excited to be joining Verde at this exact moment, and I want to thank Cristiano and the entire team for the trust that they're putting on me. I know that Cristiano is not going to be going away. He's going to be leading the rare earth project mostly, but he's going to be advising us and the whole team, not just myself, but Felipe and Marcus, to keep the operations going. It's impossible to replace a guy that has been around for 20-some years. I'm going to be counting a lot on you, Cristiano, to help me on that transition so I can get up to speed much faster than I would have done by myself, actually. I think that's it in a nutshell.
That's me. That's what I'm excited about, and that's why I'm joining Verde.
Thank you. Thank you, Herbeth Machado. We're all very eager to work under your leadership. Under your leadership, I will be doing everything I can to help us to continue succeeding. One question that a lot of the investors who I've been talking to today asked me, I think would be good if you could also answer this question to everyone who has joined the call, but also to anyone who's watching our YouTube and might share this with other people who might be interested, is why? Why Herbeth Machado? Why did you decide to join Verde AgriTech? What created this interest? Tell us a little bit more about this.
Let alone the fact that Verde has a great potential for growth. We got installed capacity of 3 million tons a year for production, we have a lot of room to grow our sales, there's a big upside there for all of us to investigate. The thing that actually drove me or caught my interest was the kind of product that Verde has. The potassium chloride, especially in the cane industry where I come from, has been a big problem for the plant operations. The chloride is highly corrosive once it hits the plant. Just to give you guys an idea, I used to spend more than BRL 40 million or BRL 40 million in maintenance for the mills and pipes and pumps, just because of the corrosion that the chloride actually was providing to the plant.
I see that our product doesn't have chloride, as you guys are fully aware. That was something that really caught my attention, right. The same problem that I was facing in one plant alone, 382 other plants in Brazil that are sugar mills are probably facing the same. If we're able just to capture a fraction of those mills that are facing the same problems that I had in the past, we're going to be able to top it up the production capacity quite quickly. I see a great potential in the company for growth, and I see a great product that we should just, not investigate, but we should put to a good use or find the right clients. Educate them where the benefits are.
The benefits for our product is not just the economical solution that it provides in terms of potassium, but it's all the reflex that the chloride from our competitor also causes in terms of damage and maintenance and costs for integrated agri operations.
Thank you. Thank you, Herbeth Machado. Something else should help us a lot, Herbeth Machado, from your background, and I wanted you to talk to investors a little bit about was your experience in Harvard Business School. I understand that after you left as CEO of the company, you went on to spend two years at Harvard Business School. How has that academic professional experience changed you as an executive, how you see running a company and also in terms of network? Talk to us a little bit about your experience.
Sure. Well, after I got my chemical engineering degree, I also got an MBA from University of Alberta. It took me 4 years to get that MBA because I always thought that having the technical background combined with the business background would be ideal for any executive, and that was always my dream. Back at that time, I tried to get into Harvard. That was in 2004. I got accepted, because I was immigrating to Canada, I had a condition that I could not leave the country for more than 6 months. Harvard has been in the back of my head for many years. Finally in 2018, 2019 actually, I got a chance, I got accepted into the Harvard Advanced Management Program. I had a chance to be on campus for more than 3 months, developing personal relationships, networking throughout the world.
Just to give you guys an idea how the program works, they select every year 100 executives throughout the world from the most different sectors you could imagine. Like I had Perry Zurch. The guy was twice on the International Space Station. Colonel, in my group. I had the chance to have a couple of CIA guys in my group, and FBI guys in my group. Let alone executives from all the different industries, like BlackRock, Suncor here in Canada, Export here in Canada, TransAlta here in Canada. The CDO of McDonald's is a personal friend of mine today, Tabassum. I just went to her daughter's wedding last year in Mexico. That's just to give you guys an idea what that kind of a program provides you, what kind of network you have.
If I'm anywhere in the world, we have a WhatsApp group that I just drop a line and I meet people up for dinner, and we talk about business and talk about opportunities and whatever is missing on my background or something that I need advice on, there is always someone to come in and support me on that. Going back to Harvard, or going back to your point, Cristiano, Harvard was not only a dream that I had since I was a kid, but also was mind-blowing in terms of kinds of connections that actually it's provided me since I went there in 2019.
You used the word dream, Herbeth Machado. You're going back to Brazil now. You live in Canada. To move to the Brazilian countryside, to live in Uberlândia, to live in farm town and the farming world in the heart of the Brazilian agriculture region. With all this potential you've just mentioned, what is your dream now? What is your dream? What are you after? What is going to be driving you now?
To be quite honest, it's just to drive the company up. We got to re-set the sales. We got to go after the big clients. That's the reason why I decided to move to Uberlândia, because I think, I believe, strongly believe, that I have to be there being the new face of the company. I have to be meeting the new clients, potential clients, big institutions, participating in different conferences, speaking to different consultants in the agricultural sector. That would be impossible to be done remotely or living here in Canada. Going back to Brazil, it is part of my dream now. It's the next phase in my life that I have to embrace, and I'm really excited about that. Uberlândia is a fantastic city. I was there visiting last time that we met in Brazil, Cristiano, and I found out that the city is fantastic.
It's clean, it's organized, it's safe. It has almost 800,000 people, so it's not like a farm town. It's a big city, even for Canadian standards. I don't think I'll have any problems in inserting myself in that new lifestyle. Brazil is a fantastic country. It has a lot of opportunities. If you're talking about agribusiness, Brazil is the place to be. There is no doubt about it.
You're right. It's a big town. Also those 800,000 people there, I'm pretty sure you have thousands of farmers there, including some of the largest agriculture corporations headquartered in Uberlândia. We will now start answering some of the questions sent here. There aren't many. If you have any other question once you watch this on YouTube, or if you can think of anything, please do not hesitate to send us an email. First question is a technical question. I'm going to be answering some of them here, Herbeth Machado. The first one is a technical question about pelletization, granulation of our product. This is something we've done all development. It's all consolidated. It's more of a focus in an economic perspective, but there's no challenge and it's something we have under control. The other question here is a question about focus. It's a question about focus.
The question is, are you going to be focusing on eucalyptus and sugarcane, large and small agriculture farms, or will it be more global? Another question about ERW. About focus, Gabriel, we've done a big restructuring, which was in the last press release or the one before, which also resulted in substantial cost savings, about BRL 10 million. We have really directed our commercial efforts towards large growers, and we've moved towards that, both from a volume perspective, but also from a credit risk perspective. We're still going to try to supply the smaller farmers as best as we possibly can with our phenomenal inside sales team led by Mayada and Carol.
It's really where I think Herbeth Machado will be able to do a brilliant job on those bigger clients now, which he's already spoken extensively, so I don't think at this point, I think it's plenty there already. The other question about ERW, enhanced rock weathering. Do you want to talk a little bit, Herbeth Machado, about your view on carbon capture, Brazilian carbon regulated markets, your experience with carbon? We all know that this is really going to be the huge driver for Verde AgriTech. It's really growing. What's your view on carbon and where do you see the potentials? What's your view on ERW, enhanced rock weathering? Talk to us a little bit about that.
Just a bit of a background. The mill that I ran in Brazil was the first mill in the world, actually, to have carbon credits under the UN. We're number 26 at the UN for carbon credits because of our power generation from the gas. As soon as I got there, I saw the potential to get credit for carbon capture, and we filed for that project. I went to the UN to debate and to present the project, and we finally got that. It was something that was not substantial in terms of revenue, but every bit helps. The idea was just to give people or to show people that carbon credits is not just big corporations or international corporations that are able to do it. Anyone can do it, especially nowadays. This project that we're talking about, that was 15 years ago.
Now the situation has changed quite a bit. Since I came back to Canada after leaving the mill, I was working for a company called Keeper Energy, that we basically converted biomass, lignin, cellulose, and hemicellulose under pressure and temperature into biocrude, into renewable fuels, SAF, sustainable aviation fuel, diesel. All renewable fuels. The way that we found to do that was heavily based on the carbon credits that we're getting from. Instead of letting the biomass just stay in the field, just deteriorating into CO2 and methane, we converted that biomass into a usable fuel or usable product. In the process of doing so, we're able to generate carbon credits. Our CI was much, much lower than the fossil fuels. Because of that, we're able to create the credits and commercialize the credits. That's basically what kept the technology alive.
Was not the price of the oil, because our oil was much higher, much more costly than fossil fuel. Given the carbon credits that we're getting from it, we're highly competitive in terms of price. Talking about Verde for the carbon credits, it was a surprise to me once we started talking about enhanced rock weathering, and the potential that it has to capture CO2 in the form of a carbonate, to sequester it indefinitely, right? One of the problems that we have here in Alberta, where I currently live, is that there is a lot of CO2 and there is a lot of CO2 storage, but no one can actually prove that that CO2, once it's pumped into the ground, stays there forever. That's one of the biggest liabilities that a project for carbon capture has today. In the case of Verde, our product provides quite the opposite.
It's a chemical reaction that traps the CO2 into the form of a carbonate, and that gets leached and goes-- not leached, but it gets dissolved and runs off in the water and goes to the sea, where it's stored permanently. I think it's a great potential for us to explore that. I know that Cristiano and the team have done a fantastic job in closing a collaboration with UNDO in London to measure how much credits or how much carbon we're actually doing by using our products in the field, how much carbon we're going to be capturing therefore, how much carbon credits can be generated and commercialized. I'm really looking forward in revamping or looking into that project of the enhanced rock weathering again.
Phenomenal experience, Herbie. The last question we have here. Oh, there's a few more now. Oh, boy. There's quite a few more, so try to move a bit quicker now. It's about Magnes Rare Earths. Magnes is from the Latin, magnetic. That's what we're after. That's what we've seen. Lots and lots of magnetic rare earths. Lots of neodymium, praseodymium, dysprosium, terbium. All very exciting. We will have press release with drilling soon. The other question, the hype for us is here, and it would be nice to ride a wave and have a good share price provided as possible in case there is a release of shares to reduce dilutions. There's a question here about the hype of rare earths. It's just my opinion. It's just forward-looking statement.
I think when you look at the data for magnetic rare earth oxides, I think it's early days. I think it's very early days. The big driver of robots, and I don't know if it's just because I look at so much robots on my X feed. That's crazy what you see those little things doing and big ones and it's so exciting. It's so exciting. The use case is so compelling. When you see how much neodymium, praseodymium, dysprosium, and terbium those little things need, all those actuators, all the movements you see in the robots, that's a pure magnetic powered movement. When you say I think it might still be very early days on what we might see in terms of an explosion in demand of magnetic rare earth oxides coming from robots. Hey, I'm not the only one saying that.
You have a phenomenal report that came out by Morgan Stanley last year looking at a crazy demand. You have a very interesting recent report, I think Bank of America, also looking at the crazy growth. It's a big impact. It's a big impact on the supply. Hopefully we'll be able to develop it fast enough to allow as many of those little humanoid robots to run the marathons and hopefully do more useful stuff. The other question, please tell us how the spin-off might proceed. What are the key milestones you're looking at the timing? Press release said not for U.S. distribution and some of the stuff, some of the content of the press release I won't be talking, but from the planning on how we intend to move it forward, there are 2 key milestones we're working towards.
The first one is a resource report, an S-K 1,300 compliant resource report, hopefully, with a significant resource of also significant quality resource, but also to work on a PEA, preliminary economic assessment, also to be undertaken under S-K 1,300 and hopefully also to show some very attractive economics, but also to not forget, we have a lot of experience building mines to production in that very same area, and we hope to leverage that experience and our access and all the mistakes we made and everything we learned from those mistakes to be able to bring, if economic, if there's a resource there, to be able to potentially bring that to production as soon as possible. Next question. Can you walk us through the intended timeline and structure of Magnes Rare Earths? Is the goal ultimately a full spin-off to Verde shareholders, similar to Obi transaction?
Will it remain a subsidiary until the U.S. listing? The idea is to do the spin-off once we're ready to go public. Rather than doing what happened with Obi, the idea is to keep it in the same structure, operating as an independent company, and once we're list, we're list. As of today, that's the plan. It might not change in the future, that is what the plan is. Next question. I'm still unclear as to the logistics. Will the parent and publicly traded company own two distinct companies, Verde and Magnes Rare Earths, each with a unique CEO, or is there a plan to spin off Magnes to Verde shareholders, and thus will shareholders own a new spin-off to Magnes, which will also be publicly traded? That's my question. I believe, Rich, I've just answered this question as well.
We hope at some point early next year to have two fully independent companies. As you know, Rich, there's a lot of risk and investment required when you are looking to bring a new mining company to production. We just felt very strongly that Verde AgriTech have to focus on what is already a fantastic business, fertilizers, with a huge size for growth. It would make more sense for Verde AgriTech if the risk, if the capital commitment required to build a new operation and all of the risks inherent to this new endeavor, if that was to be undertaken by a fully independent company, i.e. Magnes. Ladies and gentlemen, thank you very much for joining today's very special conference call. If you're watching this on YouTube, thank you very much. If you have any questions, please reach out.
Again, I'd like to thank the team who has joined us on today's call, Edson Santos, Elton Gonçalves, Marcus Ribeiro, and Felipe Paolucci. I would like to thank Herbeth Machado one more time for joining Verde AgriTech. Very excited as a shareholder and very excited to the coming months under his leadership and hope to be able to help whichever capacity I can. Also, I'd like to thank all of you shareholders, all of our co-owners who supported me, who challenged me, who asked tough questions along the way, who criticized me, kept me in check. A big thank you for all of you who allowed me and the company and all of us to get to where we are. If it wasn't because of your support, your patience, your interest, certainly we wouldn't have succeeded to the point we did.
Thank you, and I'm very glad and excited to be able to carry on working for you now under Magnes Rare Earths. Take care very much and have a great day. Bye-bye.