Sirius Minerals Plc, Scarborough, England, announced on June 12 that it has signed a take-or-pay supply agreement with Indian Farmers Fertiliser Cooperative Ltd. (IFFCO) for the supply of Poly4 in India, further boosting its contracted sales volumes ahead of the start-up of its polyhalite mining and processing project under development in North Yorkshire.
The volumes agreed to with IFFCO will ramp up to 1 million mt/y in year eight of the 11-year term, with an option, subject to mutual agreement of the parties, to increase this by an additional 250,000 mt/y to 1.25 million mt/y. The deal is for the exclusive supply and distribution of Poly4 throughout India. IFFCO has over 36,000 member cooperatives and access to over 55 million Indian farmers.
Sirius said pricing is based on a nutrient-linked formula on a CIF India basis. Volume commitments ramp up after Sirius’ first commercial production begins, and the initial terms include provisions for volume flexibility where, subject to certain conditions, IFFCO may roll forward a proportion of the minimum quantities between contract years. Similarly, subject to Sirius’ agreement, IFFCO may also elect to increase ramp-up volumes.
Under the deal, IFFCO has a break clause after year eight. There is also a 10-year extension option subject to mutual agreement by the two parties.
IFFCO’s Managing Director and CEO Udai Sanker Awasthi said the multi-nutrient characteristics of Poly4 are “well-suited” to Indian soils and crops.
The new deal takes Sirius’ total peak aggregate volumes now under contract to 11.7 million mt/y, or 13.4 million mt/y when customer volume options are included.
Sirius is targeting the extraction of the first polyhalite from the Woodsmith Mine by the end of 2021, but the delivery of the project on the current schedule remains subject to the timing of receipt of Stage-2 project financing.
The company in early May announced the launch of its “markets-led” Stage 2 project financing, under which it aims to raise a total of US$3.8 billion (including financing costs) to fund the polyhalite project to completion (GM May 3, p. 1). However, the securing of the proposed US$2.5 billion revolving credit facility element of the financing package agreed to with JP Morgan Securities LLC is contingent upon the completion of a full US$500 million bond issue before Oct. 30, 2019.