Sirius ‘milestone’ with China deal

The 10-year deal with TCT will start in 2017 and will be set at a fixed price per tonne for the first three years with a re-negotiation of pricing from year four onwards.

Sirius Minerals, the company behind York Potash, said the initial price will remain confidential.

The agreement contains several conditions including collaboration on testing, results from crop trials of polyhalite in Yunnan and Chinese government approvals.

The signing ceremony took place in Kunming and was attended by senior government officials from the Yunnan Province as well as senior executives from the Industrial and Commercial Bank of China.

TCT is one of the fastest growing domestic agricultural products companies in China.

Yu Yan Qing, TCT’s chief executive, said: “We see great potential in polyhalite as an organic multi-nutrient fertiliser that can provide a competitive advance in agricultural efficiency and helping to increase crop yields and quality in China.

“This is an important step for a long term and prosperous relationship between TCT and Sirius Minerals.”

Chris Fraser, managing director and chief executive of Sirius, said: “This is a major milestone for the company that further demonstrates the market for polyhalite, supports the economics behind the project and will ultimately help to give confidence in the financing for construction.

“The off-take agreement is the latest endorsement of the global demand for polyhalite, its unique multi-nutrient qualities and the role that balanced fertilisation can play in the largest fertiliser market in the world.”

York Potash has already signed up a number of UK and European fertiliser distributors and manufacturers to buy polyhalite nutrient from the mine.

The deals are framework sales agreements and set out volume commitments ahead of formal sales contracts which will be signed closer to the time of first production, which is a standard procedure in the fertiliser industry.

The deals add up to 310,000 tonnes a year including 60,000 tonnes of sales in the UK.

Sirius said the agreements are with established fertiliser manufacturers and distributors, rather than traders and will remain confidential for now.

Pricing will be agreed when formal contracts are signed and will be based on market conditions at the time.

Sirius said the markets covered by these agreements represent only a small percentage of the total European fertiliser market and highlight the opportunity for further sales across the UK and Europe.

It added that discussions about polyhalite supply agreements to other customers are continuing with a range of major distributors and fertiliser blenders around the world.

While these discussions are at various stages, if they reach a successful conclusion Sirius said the total demand would exceed York Potash’s initial production target of five million tonnes a year.

Mr Fraser said: “Customers both here in the UK and around the world are seeing significant agronomic value in our products and are encouraging us to reach production as fast as possible.” Sirius will find out later this summer if its planning application is successful.

The new sales agreements come at a time when York Potash still faces opposition to the new mine.

National park chiefs warned that the mine could face major challenges, despite developers allaying concerns over the impact on a radar base.

The Ministry of Defence (MoD) had raised fears the proposed mine could lead to subsidence which would play havoc with ultra-sensitive monitoring equipment at the nearby RAF Fylingdales. However, Sirius has held talks with the MoD and subsequently drawn up detailed planning conditions which have now been submitted.

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