Junior company Danakali Ltd., on behalf of Colluli Mining Share Co., said June 11 that it has a binding take-or-pay offtake agreement with EuroChem Trading GmbH for up to 100 percent of Module I Sulfate of Potash (SOP) production from the Colluli Potash Project. The Project, located in Eritrea, East Africa, is 100 percent owned by CMSC, a 50:50 joint venture between Danakali and the Eritrean National Mining Corp.
EuroChem will take, pay, market and distribute up to 100 percent (minimum 87 percent) of Colluli Module I SOP production. EuroChem may use a portion of Colluli SOP to product NPKS at its facilities in Antwerp, Belgium and Nevinnomyssk, Russia. The balance of SOP provided to EuroChem will be sold through their international channels. CMSC has the option to sell up to 13 percent through alternative sales channels.
The term of the agreement is 10 years from the date of commissioning of the Colluli SOP processing plant, with an option to extend for a further 3 years if agreed by EuroChem and CMSC. EuroChem may terminate the agreement if first commercial production has not occurred by July 1, 2022; well beyond CMSC’s production commencement expectations. Either party may terminate the agreement if a project financing agreement has not been executed and first drawdown achieved within 14 months of the signing of the agreement. The Danakali and CMSC boards, and the Eritrean Ministry of Energy and Mines, have approved CMSC’s entry into the agreement.
LSB Industries Inc., Oklahoma City, said June 12 that the ammonia plant at its El Dorado, Ark., chemical facility was taken out of service on June 4, 2018 after a power failure at the facility. Since that time, LSB management has been involved in the process of assessing the extent of the necessary repairs and has determined that the power outage resulted in tube failures in the ammonia plant’s boiler. LSB management estimates that these repairs will be completed, and ammonia production will resume, by the last week of June 2018. Management estimates the total impact to EBITDA in the second quarter of 2018 resulting from unplanned repair expenses, reduced absorption of fixed costs relating to the downtime and lost sales will be approximately $10.0 million to $11.0 million.
While El Dorado’s ammonia plant is out of service, the company has elected to pull forward work previously planned for the September 2018 turnaround, which will further shorten the planned turnaround in the third quarter to five days, from the previously revised twelve days, resulting in additional third quarter production and reduced turnaround expense.
Additionally, the ammonia plant at LSB’s Pryor, Okla. chemical facility was taken out of service for short periods at multiple points during the quarter to repair leaks to the waste heat boiler. Management estimates the second quarter EBITDA impact from the downtime at Pryor to be approximately $3.0 million to $4.0 million.
Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
For additional details visit our
Terms of Use.
