Petrobas Shares Higher By 5% As Company Auctions Potassium Mining Rights

Zinger Key Points
  • Brazilian oil giant Petrobas is seeking a buyer for its potassium mining rights.
  • Potash prices have skyrocketed by more than 177% in the past year.
Petrobas Shares Higher By 5% As Company Auctions Potassium Mining Rights

Shares of Brazilian oil giant Petroleo Brasileiro ADR PBR traded higher by 5% on Friday after the company announced it is selling its potassium mining rights in the Amazon Basin.

What Happened? Petrobas said Thursday that it is seeking bidders for its potassium mining assets, including eight mining concessions, four granted mining requests and 22 pending requests for research.

Related Link: CPI Inflation Slows To 8.5% In July, Stocks Rip Higher — But Are Wages Keeping Up?

Why It's Important: Global Potash supply has gotten squeezed since Russia invaded Ukraine. Russia and Belarus account for a combined 40% of global potash stocks, which is a key ingredient in fertilizers used to grow corn, soy, rice and wheat.

Potassium chloride spot prices are up about 177% from a year ago.

Brazil's agriculture sector reportedly imports about 85% of its fertilizer.

Related Link: 7 Best Energy Stocks To Buy With Over 6% Dividend Yields: Ecopetrol, Energy Transfer LP And More

Petrobas also announced it is cutting diesel prices for the second time in a week on Thursday as part of Brazilian President Jair Bolsonaro's push to combat inflation.

Petrobas' big move helped push the Ishares Msci Brazil ETF EWZ higher by 1.9% on Friday, and several other big Brazilian stocks may have been trading higher in sympathy:

  • Banco Bradesco SA BBD was up 1.7%
  • Suzano SUZ was up 2%
  • Ultrapar Participacoes SA UGP was up 3.7%.

Friday was also the ex-dividend day for Petrobas, which has a whopping 19.8% yield. Shareholders who bought the stock prior to Friday are entitled to a $1.295 dividend to be paid on Sept. 8.

Benzinga's Take: The SPDR S&P 500 ETF Trust SPY has struggled so far in 2022, but the EWZ Brazil ETF is up 14.7% year-to-date. Petrobas has been a top performer among U.S.-listed Brazilian stocks, generating a more than 40.6% year-to-date total return.

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