Australian junior urea producer Strike Energy Ltd., West Perth, said on May 19 that it has completed its competitive urea offtake process (GM Sept. 24, 2021) and selected Koch Fertilizer LLC, a subsidiary of Koch Industries Inc., Wichita, as the preferred bidder for the offtake of 100% of the 1.4 million mt/y of granulated urea production from Strike’s proposed Project Haber development adjacent to Geraldton Port, Western Australia.
“This award creates the foundations for an exciting and transformational period for the company, at the conclusion of which Strike will have completed its journey to becoming a fully vertically integrated manufacturer of high energy intensive and low-carbon emission products,” said Strike Managing Director & CEO Stuart Nicholls. “Securing Koch Fertilizer as Strike’s sole offtaker would give Project Haber a high degree of creditworthiness and financial security. Having a single long-term offtaker for 100% of the urea production will provide the foundation for the financial architecture required to successfully finance this nationally significant development.
“Australia’s farmers are set to benefit from the re-domestication of Australian urea manufacturing, which will secure a local supply of globally cost competitive, low-carbon emission nitrogen-based fertilizer,” he added. “With global urea prices at all-time highs, the timing for this development in Australia is now.”
Strike and Koch have entered into a nonbinding term sheet and will now enter into the drafting and negotiation of a full form definitive offtake agreement reflective of key terms agreed in the term sheet, which include a 10-15 year supply period, pricing linked to international benchmarks, and a condition precedent relating to Project Haber’s final investment decision.
Strike told Green Markets that there is no firm schedule on when construction will begin on the new plant, however, more news is expected soon. The company still needs to complete the front-end engineering design (FEED) and offtake agreement and financing, as well as confirm the final resource for South Erregulla natural gas.
Project Haber will be a fully integrated low-carbon urea development based at the edge of the West Australian Wheatbelt in the Mid-West region. Strike said through the integration of its adjacent low impurity natural gas, application of global best in class ammonia technology, domestication of fertilizer supply, and incorporation of green hydrogen, it is aiming to develop a low-carbon urea product to support the abatement of Australia’s agricultural emissions.