October 26, 2025
Itafos is a vertically integrated phosphate producer focused on monoammonium phosphate (MAP) and superphosphoric acid (SPA), essential fertilizers with no substitutes in modern agriculture. Phosphorus is a critical macronutrient for almost all crops, and global phosphate demand is expected to exceed supply for at least the next five years. Bringing new mines online is slow. In the United States, it generally takes eight years to advance a phosphate project from feasibility stage to production. Supply constraints favor existing producers with long mine life and reliable capacity.
(h/t Kenny Chan, https://seekingalpha.com/article/4811753-itafos-cheap-and-overlooked-with-aligned-managers)
Itafos operates one of only four integrated phosphate fertilizer facilities in the United States through its flagship Conda operation in Idaho. Conda accounts for approximately 95% of revenue. The company sells all MAP production under a multi-year supply agreement with J.R. Simplot (2024–2028), while SPA volumes are sold into the spot market.
Conda’s current mine at Rasmussen Valley is expected to run through mid-2026. A fully developed replacement mine, H1/NDR, is scheduled to begin production in mid-2025 and extend the asset’s life through at least 2037. Management expects to invest $6-8 million annually starting in 2027 to further extend Conda’s mine life well into the middle of the century.
Itafos believes Conda is among the most efficient phosphate operations in North America due to proactive maintenance and disciplined capital spending. The company reports utilization rates and EBITDA margins higher than publicly traded peers Mosaic and Nutrien. Mosaic recently announced more than $100 million in catch-up maintenance investment to restore capacity, while Itafos has consistently prioritized maintenance capex.
Outside the United States, Itafos owns three phosphate projects: two in Brazil (Arraias and Santana) and one in Guinea-Bissau (Farim). Arraias currently produces sulfuric acid and is being restarted for fertilizer production, although lower ore quality limits profitability. Santana and Farim are higher-potential development assets requiring significant capital. Management is actively evaluating strategic alternatives including partnership financing or divestiture. Farim in particular holds higher-grade reserves than Conda and could be worth tens of millions of dollars or more, though its location would likely result in a discounted valuation.
MARKET PRICES
Supply and demand fundamentals for phosphate rock and fertilizers are exceptionally strong in the United States and globally.
(h/t Kenny Chan, https://seekingalpha.com/article/4811753-itafos-cheap-and-overlooked-with-aligned-managers)
In the US, phosphate supply is dominated by domestic producers. The US Geological Survey (USGS) estimates US consumption at approximately 23 Mt in 2024, with only ~3.5 Mt imported. More than 95% of US-mined phosphate rock is used as feedstock for fertilizer. Finished fertilizer products are similarly domestic: the USDA reports 6.0 million short tons produced versus just 1.4 million imported in 2023.
The US market remains partially insulated from global price swings due to countervailing duties on imports from Morocco and Russia. Imposed in 2021, these duties currently range from 16.6% to 47% and are undergoing their five-year sunset review by the DOC and ITC. Prior to tariffs, Morocco and Russia supplied roughly 80% of US phosphate fertilizer imports. By 2024, their share had dropped to only 4.5%. Additional baseline tariffs may further restrict imports from other countries.
This insulation means domestic production capacity is the key constraint on US supply. That capacity has steadily declined. MAP and DAP production has fallen nearly 50% since 2010 (The Fertilizer Institute). USGS data shows phosphate ore production dropping from ~50 Mt in the early 1980s to ~20 Mt in 2023.
Demand, meanwhile, has remained resilient. Total planted acreage for major US crops declined only modestly from 328 million acres in 2000 to 315 million in 2024, despite periodic weather-related impacts. Roughly 20% of US agricultural output is exported, exposing farmers to potential trade tensions, including ongoing tariff threats from China, the EU, and North American trading partners. However, government support is increasing. USDA projects direct farm payments will rise to $42.4 billion in 2025, up from $9.3 billion in 2024, which should stabilize farm input spending.
The US also participates in export markets for fertilizer. USGS estimates that approximately 25% of wet-process phosphoric acid output, which underpins most domestic fertilizer production, was exported in 2024 in the form of MAP, DAP, and related products.
Global fundamentals are likewise favorable. Mosaic expects supply to lag demand under most scenarios, driven by rising food needs and continued biofuel expansion. Crop yield growth may need to triple—from 0.4% annually since 2000 to 1.2%—to meet projected food and fuel demand, which requires increased fertilizer use.
At the same time, global export capacity is tightening. China, which accounted for ~24% of global phosphate exports over the past three years, has reduced shipments through export controls since 2022 and is expected to cut exports by another 25% over the next five years to prioritize domestic food security. Growth in lithium iron phosphate (LFP) battery production further diverts phosphate from fertilizer markets.
Bringing new supply to market is slow everywhere. Even after feasibility approval, US phosphate mines typically require eight years for permitting, engineering, and financing before production, plus one to two years of ramp-up. New projects in Morocco, despite government backing, still often take 3–5 years to begin output.
Overall, both US and global trends point to a structural supply deficit. With declining domestic production, constrained imports, rising agricultural demand, and long project lead times, phosphate pricing over the next several years appears well supported
Recent US MAP and DAP prices are meaningfully higher.
RECENT HISTORY
Itafos wasn’t profitable until 2021 and it also had high debt levels in the past. Itafos hasn’t held any earnings calls and didn’t go to investment conferences until a recent Sidoti conference.
Moreover, Itafos was basically an investment vehicle for their current majority owner Castlelake, an asset management firm that owns 65% of the outstanding shares. Castlelake still has two board seats. Itafos used to be part of Castlelake’s natural resource arm, which has since been wound down.
Now Castlelake is actively helping Itafos find ways to unlock value.
Itafos is looking to uplist to the Toronto exchange and is also looking to uplist their OTC US listing.
VALUATION
Note: All figures are in U.S. dollars unless otherwise indicated.
Share outstanding are 193,234,714. The stock price is $2.32.
The market cap is $448.3 million, while enterprise value is $443.4 million. Cash is $98.1 million, while debt is $122.8 million.
Here are the multiples:
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- EV/EBITDA = 2.96
- P/E = 4.13
- P/B = 1.03
- P/CF = 4.32
- P/S = 0.86
PEG = 0.41 (based on estimated 10% earnings growth).
ROE is 30.9%, which is excellent. TL/TA is 48.8%, which is decent.
The Piotroski F_Score is 6, which is OK. But it’s improving.
Insider ownership: Castlelake owns 65% of the shares, while management and the board own 1.3% of the shares. It would be much better if management owned more shares.
Intrinsic value scenarios:
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- Low case: There could be a bear market or a recession. Or, there could be a weather-related decline in US farming, like the flood in 2019 that caused more than 19.4 million acres to remain unplanted. In any of these cases, the stock could move much lower.
- Mid case: The current P/E is 4.13, but should be at least 10. That would mean the stock is worth $5.62, which is over 140% higher than today’s $2.32.
- High case: With ROE over 30%, arguably the P/E should be 15. That would mean the stock is worth $8.43, which is over 260% higher than today’s $2.32.
RISKS
A weather-related event could impact US farming. For instance, in 2019, major flooding caused more than 19.4 million acres to remain unplanted, the most since the figure began to be reported in 2007.
Unless the US reaches an agreement with its trading partners regarding agricultural products, tariffs on US agricultural products could be implemented by other countries, which could damage the US farming industry.
US subsidies to the farming industry could be decreased or removed. This is unlikely, because of the industry’s political power and economic importance. But it’s possible.
A decision to sunset countervailing duties on Morocco and Russia would affect prices, but this is also unlikely, due to the administration’s focus on domestic production.
Global supply could grow, but this would be seen well in advance.
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