Sirius Minerals Plc (LON:SXX) announced the signing of binding take-or-pay supply agreements to supply POLY4 to Guangzhou Eiliseng Biotech Co Ltd and Yantai Service Agricultural Science and Technology Co Ltd.
Highlights
§ New long-term supply agreements signed each with two new Chinese customers, Eiliseng and YSA, for 1.2 Mtpa and 800,000 tpa respectively
§ Pricing terms consistent with the Company’s existing agreements
§ Eiliseng taken up the rights to resell POLY4 in Yunnan and Sichuan and to service demand from Dian Huang
§ Dian Huang and the Company have mutually agreed to terminate the existing agreement for supply of up to 1 Mtpa
§ Company’s aggregate peak contracted take-or-pay sales volume increased to 5.7 Mtpa
Sirius has entered into binding take-or-pay supply agreements with each of Eiliseng and YSA for the resale of POLY4 into certain southern and northern provinces of China. Both agreements have 10-year terms which run from first production and pricing mechanisms linked to relevant product benchmarks that are consistent with the Company’s existing portfolio of agreements.
In China, government enforced changes in agricultural practices and planned farm consolidation will support the drive to restore soil efficiencies through the adoption of more balanced and environmentally sustainable fertilization practices. Sirius has conducted over 320 successful agronomy trials on 35 types of crop in 23 countries. These trials have demonstrated the benefits of POLY4 as a multi-nutrient fertilizer with a low environmental impact that delivers greater nutrient uptake and can improve both yield and quality.
This announcement builds on the Company’s strong position in Asia, having signed multiple deals across the region with distributors including leading agri-business Wilmar Group, one of the largest and most established fertilizer buyers and distributors in South East Asia.
Taking the minimum volumes under the new Chinese agreements into account, the Company’s aggregate peak contracted take-or-pay sales volumes has increased from 4.7 Mtpa to 5.7 Mtpa.
Chris Fraser, Managing Director and CEO of Sirius, comments:
“China is a key market for POLY4 and we are very pleased to have signed agreements with new customers who both have established fertilizer distribution networks and expertise relevant to their respective regions. We look forward to working with Eiliseng and YSA to establish POLY4 as a long term sustainable fertilizer for use in both of their important agricultural regions in China.”