Best Stocks for 2022: Arianne Phosphate Will Soar On Agriculture And EV Demand Investorplace.com
Impact Investing Forum 2022
London. April 28-29, 2022.
Everyone knows the best gifts come in small packages. At the top of my list to buy for 2022 is a microcap sleeper stock: Arianne Phospate (OTCMKTS:DRRSF), a Canadian mineral exploration company.
Hovering near a $90 million market cap, Arianne is focused on phosphate mining at its Lac à Paul greenfield project in Quebec. The company manages one of the largest phosphate reserves in Canada, estimated at 590 tons. Its assets are also larger, cleaner and more pure than almost any project on earth right now.
For those less familiar with phosphate, it’s an essential ingredient in two growing product categories: fertilizer and electric vehicle (EV) batteries. The phosphate market is projected to reach $45 billion by 2030 and presently growing at a healthy 2.8% CAGR.
Fertilizers represent around 87% of the world’s phosphate. While it sounds like a sleepy industry, recent trends have severely tightened the world’s fertilizer supply. Fertilizer prices have steadily risen this past year and agricultural economists anticipate per-acre fertilizer costs will be about $100/acre higher for corn and $50/acre higher for soybeans compared to last year.
At the same time, soaring world population statistics require agricultural production to increase by 60% by 2050 in order to support growing food and feed demand. As North America battles to find the supplies to fuel its corn and soybean crop, agricultural producers will need to turn to new phosphate suppliers. And Arianne — the only large-scale source of independent phosphate rock from a “low-risk” jurisdiction — is looking very appealing right now.
You can buy Arianne stock now as a great long-term investment on the growing demand for agricultural phosphate. But you can also buy the stock also as an option on another potential upside surprise.
Arianne’s phosphate has all the high-purity qualities necessary for use in LFP (lithium iron phosphate) batteries. In November, the company announced that it’s working with an independent testing facility and a major battery maker to process, refine, and optimize its phosphate concentrate for potential use in LFP batteries.
With Arianne shipping under 50% of its output, an EV opportunity would be a game-changer for the stock. Here’s a closer look.
Tightening Global Supply
As an independent Canadian phosphate supplier, Arianne Phosphate has become increasingly attractive owing to geopolitical and agricultural safety concerns. The main reason: China, the largest exporter of phosphate, has tightened its control over fertilizer exports, suspending all phosphate exports until at least June of 2022. Russia also followed suit, imposing a six-month quota on various fertilizer exports.
The China embargo and tariffs imposed on phosphate from other countries have immensely pressured the global phosphate trade. Outside of China, most of the world’s phosphate reserves are in Morocco (which accounts for approximately 70% of the total reserves), followed by Syria and Algeria. Other projects are located in Congo, Angola, Trinidad and Tobago, Egypt and Jordan.
The supply crisis means that those global customers, which combined purchase roughly 30% of China’s phosphate, are now direct competitors with the U.S. for whatever phosphate supplies remain available. Then consider the geopolitical tensions that exist between most Western agricultural producers and the countries that supply phosphate. Approximately 75% of the traded phosphate rock in the world is being mined in relatively politically unstable countries.