Sirius Minerals, the firm behind the £3.2bn North Yorkshire polyhalite mine, has signed a deal for port and ship loading services at the Redcar Bulk Terminal.
Analysts welcomed the news as it means the company’s Yorkshire fertiliser mine will face reduced construction risk and lower capital requirements. Sirius said it will also deliver "tremendous" economic benefits for the region.
Redcar will provide Sirius with port and ship loading services for up to 10 million tonnes of polyhalite a year.
Redcar and Sirius have also signed a long term lease for land adjacent to the company’s existing port facilities for finished product storage facilities.
Chris Fraser, managing director and CEO of Sirius, said: “We are pleased to enter into this arrangement which reduces the complexity of our construction programme and ultimately helps to simplify our stage two financing plan which is being finalised over the coming months.
“By working with a local partner, we can develop our project and also deliver benefits to an existing established business in the Tees Valley. The Redcar Bulk Terminal facility has been under-utilised since the closure of the steel works and this agreement will ultimately help us deliver tremendous economic benefits for the region.”
Garry O’Malley, Redcar Bulk Terminal’s general manager, said: “This is excellent news for Teesside and we’re delighted to be working with Sirius Minerals on a project of such regional magnitude.
“It’s another significant step forward in the continued resurgence of Redcar Bulk Terminal and demonstrates the integral role we’re playing in the regeneration of the South Tees site.”
Redcar Bulk Terminal’s port facility is located adjacent to the company’s Bran Sands site and is also a deep-water terminal capable of handling up to Capesize vessels.
Redcar has historically operated as a bulk import terminal for the adjacent steel works that closed in 2015.
Following the closure of the steelworks, Redcar Bulk Terminal continued to operate, invest and grow into a multi-model terminal attracting a number of new customers and products.
However, in order to handle polyhalite exports, some capital expenditure, predominantly ship loaders and conveyors, is required to facilitate the loading of ships with POLY4. POLY4 is the name given to the natural fertiliser which be produced from Sirius' Woodsmith mine in North Yorkshire.
Sirius will procure and install the necessary ship loading equipment and systems onto the Redcar Bulk Terminal facility.
The terminal will operate and maintain the new equipment installed and owned by Sirius. The services are to be provided for a period of 10 years from first shipment of POLY4.
From the third year of production, Sirius will guarantee certain payments to Redcar Bulk Terminal for a minimum volume of materials handling.
Sirius said the new deal will provide flexibility through the use of existing port infrastructure which will lead to capital expenditure savings and reduces construction risk during the construction programme.
Sirius has retained the right to develop its Bran Sands facility at a future date, which it plans to do in due course.