Australia’s NeuRizer Ltd. (formerly Leigh Creek Energy), Adelaide, has signed a binding, long-term agreement with its long-term strategic partner and shareholder, South Korea’s Daelim Co. Ltd., for the take or pay of 500,000 mt/y of granular urea from its proposed urea project at Leigh Creek, located some 550 kilometers north of Adelaide.
The so-named NeuRizer Urea Project (NRUP) is planned to have an initial capacity of 1 million mt/y, utilizing in-situ gasification (ISG).
The agreement with DL Trading, a 100% subsidiary of Daelim, is for an initial five years with an option to extend by mutual agreement, and is entirely for the export market.
DL Trading will purchase the urea at an agreed pricing mechanism based on index-linked pricing, putting the contract value at a potential A$1.5 billion (approximately US$1.02 billion at current exchange rates) based on forecast prices, NeuRizer said in its July 4 statement announcing the deal.
Two of the conditions precedent to the agreement is that NeuRizer has secured all necessary infrastructure and facilities to enable the shipment of at least 84,000 mt of urea per month, and a final investment decision by NeuRizer to proceed with NRUP.
The two parties inked a Heads of Agreement for the offtake in November last year.
NeuRizer Managing Director Phil Staveley said the signing of the binding take or pay agreement with DL Trading with the guarantee to take up to 50% of NRUP’s initial yearly production allows both NeuRizer and Daelim to move confidently towards project construction.
“A further 50% of uncontracted urea supply allows us to remain agile to support domestic demand and take advantage of market pricing,” he said.
The binding take or pay offtake agreement comes shortly after NeuRizer announced a deal for a private share placement to DL E&C Co. Ltd., whereby DL E&C in June took a 9.1% stake in the Australian company. DL E&C Co., also a Daelim company, is NeuRizer’s construction partner.
DL E&C was appointed the urea project’s EPCC partner in June 2021 (GM July 2, 2021).