Sirius Minerals Plc (LON:SXX) announced the signing of an agreement with ADM for the supply of binder for its POLY4 product and names ADM as the Company’s North American off-take partner.
Archer Daniels Midland Company (NYSE: ADM), a Fortune 500 company (currently ranked 48th) is one of the world’s largest agricultural processors and food ingredient providers, with approximately 31,000 employees serving customers in more than 170 countries. With a global value chain that includes approximately 500 crop procurement locations, 270 ingredient manufacturing facilities, 44 innovation centers and the world’s premier crop transportation network, ADM connects the harvest to the home, making products for food, animal feed, industrial and energy uses.
Chris Fraser, Managing Director and CEO of Sirius, comments:
“Sirius has been working with ADM for more than four years and today’s announcement further strengthens our relationship by securing ADM as an important supplier and as a customer aligning our interests for the long-term and demonstrating the significant role POLY4 will play in the world fertilizer markets.”
ADM named as North American customer
Sirius entered into an offtake agreement with ADM in 2014 and subsequently replaced that agreement with an expanded agreement in 2015. The expanded agreement is for a period of seven years from commercial production and has two five-year extension options to supply volumes of POLY4 increasing to 1.5Mtpa in year five, with an option for an additional 0.5Mtpa. ADM’s fertilizer division, ADM Fertilizer, has operated since 2004, growing its distribution footprint to 14 river terminals, 12 interior terminals and operating in the wholesale distribution spaces as well as the farm focus space in 2016.
Scott Nagel, President of ADM Fertilizer, comments:
“ADM was an early adopter of POLY4 and is excited to bring this multi nutrient low chloride fertilizer to our diverse end-user customers in the North American market including Mexico. The opportunity to expand our distribution into the Mexican market with a product like POLY4 supports the overall growth strategy of our business. We are pleased that Sirius sees the benefits of the efficient distribution system we have built in North America and we are looking forward to adding POLY4 to our portfolio of fertilizer products.”
Binder supply agreement
The Company’s granulated POLY4 product will be produced by extracting polyhalite from its Woodsmith Mine, crushing and grinding the mineral and then granulating the resulting powder using a starch binder under a patented process.
The agreement between ADM and Sirius covers three principle areas:
1. ADM will supply Sirius with binder for an initial period of five years from commencement of production with renewal options;
2. Sirius will design and construct a binder handling facility with the support and expertise of ADM, at or close to, the Company’s materials handing facility in Teesside; and
3. ADM will continue its existing research and development programme on binders for POLY4 for a further period of three years. These research activities will help to evolve processes to develop the most efficient and effective methods for the granulation of POLY4.
As part of the binder supply agreement, ADM is assessing how best to service the contract for the long-term. This assessment will include looking at the potential feasibility of constructing a new processing facility in close proximity to Sirius’ operations in Teesside to service both Sirius’ needs as well as supply for the broader UK market.
Johan Schrijver, commercial director, ADM Starches, EMEA, comments:
“This partnership has resulted in a greater understanding of the production of the POLY4 granules and has already identified operational savings and efficiency gains. Prior to the start-up of production, joint research and development will continue to further develop the understanding of the opportunities for the end-product for all POLY4 customers around the globe.”
