Good news for investors in Sirius Minerals (SXX): the prospective potash miner has found another major offtake partner for its polyhalite product. Singapore-listed Wilmar International has signed a binding take-or-pay commitment to buy up to 750,000 tonnes of the fertiliser per year over seven years. Wilmar retains the option to increase volumes to 1Mtpa (million tonnes per annum), and extend the deal by three years.
The supply agreement is for Wilmar's “use and resale exclusively in south-east Asia”, and has been struck at a pricing mechanism consistent with existing offtake agreements. Though undisclosed, analysts took this to mean $140 to $150 a tonne, suggesting the contract could be worth around $110m (£83m) a year to Sirius at its peak.
That takes the FTSE 250 group's total annual take-or-pay agreements to a maximum of 4.35Mtpa, and just shy of the 6-7Mtpa needed to bank second-stage financing, expected in 2018. Until then, Sirius will continue to put to work the $1.2bn already raised to develop the Yorkshire-based Woodsmith mine, first production from which is expected in 2021.
