Sirius Minerals, the company behind the £3.2bn polyhalite mine near Whitby, has signed a major supply agreement with Indian Farmers Fertilisers Cooperative (IFFCO).
IFFCO's primary business is the manufacturing and marketing of fertilisers and it is in the top 100 of India's Fortune 500 group of companies.
It is one of the largest co-operative societies in the world, with over 36,000 member cooperatives and access to over 55 million Indian farmers.
The agreement is for an 11-year term, with a 10-year extension option by mutual agreement.
Volumes will ramp up to one million tonnes per annum in year eight, with an option to increase this to 1.25 million tonnes per annum.
India is one of the top three fertiliser markets in the world with a total nutrient consumption of around 30 million tonnes per annum. The demand for fertilisers has been growing steadily due to increasing demand for food as the country's population increases.
With the need to increase productivity per hectare, Sirius said multi-nutrient products like its POLY4 are well suited to Indian agriculture and soils.
Analyst Yuen Low at Shore Capital said: "Sirius has celebrated yet another major take-or-pay offtake agreement, this time with Indian Farmers Fertilisers Cooperative (IFFCO).
"As a result, Sirius’s total peak aggregate volume under contract now stands at 11.7 million tonnes per annum, or 13.4 million tonnes per annum including customer volume options.
"While Sirius would still be some years from becoming cash generative, an investment in the company should become progressively de-risked and enjoy significant value uplift as it advances towards production, we believe."
The agreement is for the exclusive supply and distribution of POLY4 throughout India and is on a take-or-pay basis.
Chris Fraser, managing director and CEO of Sirius, said: "We are delighted to be embarking on a long-term partnership with IFFCO, an organisation with a wide reach and a proud history in India and a substantial profile in the global fertiliser market.
"POLY4 can undoubtedly have a hugely positive impact on Indian agriculture, both in terms of yields and sustainability and we look forward to working with IFFCO to deliver these benefits for Indian farmers for many years to come."
Dr Udai Shanker Awasthi, managing director and chief executive of IFFCO, said: "POLY4 offers a unique opportunity for IFFCO to help deliver our vision of increasing farmer's incomes by increasing crop productivity and the balanced use of energy efficient fertilisers."
He said the multi-nutrient characteristics of POLY4 are well suited to Indian soils and crops.
"Having seen the ongoing crop science work and results, I know that this partnership between Sirius and IFFCO will have an important role to play for farmers in improving yield, quality and profitability of crops," he added.
"This agreement is very much in line with IFFCO's ongoing initiative of achieving balanced nutritional management for soil, because good quality soil will help our farmers to increase their yields. In turn this can help in our Prime Minister's initiative of seeking to double farmer income by 2022 as well as helping to address the most challenging issues of agricultural sustainability and food security."
Dr Awasthi said POLY4's combination of potassium, sulphur, magnesium and calcium, together with trace micro-nutrients, low chloride content and suitability for organic use, means that it offers better balanced crop nutrition and sustained soil health to Indian agriculture and farmers.
Sirius said that volume commitments will ramp up after the first commercial production begins. The initial terms include provisions for volume flexibility where, subject to certain conditions.
IFFCO may roll forward a proportion of the minimum quantities between contract years. Similarly, subject to the agreement of the company, IFFCO may also elect to increase ramp up volumes.
The agreement provides for a steering committee that will be established to assist both parties in working together to implement the in-country marketing plan for sales of POLY4, including liaising in relation to research and development.