LONDON (ICIS)--UK start-up Sirius Minerals on Tuesday revealed US agricultural processor, distributor, and trader Archer Daniels Midland (ADM) as an offtake partner, having promised to supply up to 1.5m tonnes of its polyhalite-based fertilizer over seven years.
The agreement will commence from the start of production - currently expected in 2021. The deal also includes two five-year extension options, and the option to supply an additional 500,000 tonnes/year.
The offtake deal was first signed in 2014, and then extended in 2015 - but the UK developer kept ADM’s identity out of the limelight, until now.
ADM’s fertilizer division operates 14 river terminals in the USA, plus 12 interior terminals, and boasts an extensive distribution operation.
Mexico may be a future target for Poly4 sales, according to Scott Nagel, president of ADM Fertilizer, who adds: “The opportunity to expand our distribution into the Mexican market with a product like Poly4 supports the overall growth strategy of our business.”
In the same announcement, Sirius also revealed ADM as a supplier of starch-based binding agent - a vital ingredient to granulate its Poly4 product.
ADM will supply the agent for an initial period of five years from commencement of production, with renewal options.
Sirius will also design and construct a handling facility for the agent at its Teeside site, and can rely on ADM to continue existing R&D on its binder products, as part of the deal.
ADM also hinted at a potential new UK base for its operations as part of the agreement, stating: “ADM is assessing how best to service the contract for the long-term.
“This assessment will include looking at the potential feasibility of constructing a new processing facility in close proximity to Sirius’ operations in Teesside, to service both Sirius’ needs as well as supply for the broader UK market.”
The announcement of Sirius’ agreement with ADM follows news last week of a 2m tonne/year binding offtake agreement with two Chinese buyers - Guangzhou Eiliseng Biotech and Yantai Service Agricultural Science and Technology (YSA), which are to receive 1.2m tonnes/year, and 800,000 tonnes/year, respectively.
However, Sirius subsequently rebuffed a “disinformation campaign” criticising the Yorkshire-based developer, which came to light after a market source spoke to ICIS regarding an email sent by a “source in China”.
The email stated that Guangzhou Eiliseng Biotech and YSA "have no ability to sell 2m tonnes of product, or any large" volumes.
“The two companies Sirius has signed up to supply are very small private companies... the owners of the companies could shut them down at any time, and leave Sirius with any problems,” the email continued.
Sirius Minerals said it was "comfortable" with the signatory counterparties after the firm undertook a "thorough due diligence" process before signing the contracts.
"For us, the key is the access both companies have to effective routes to market... There is an active disinformation campaign being peddled by some behind the scenes," said Sirius.
Sirius’ developmental Woodsmith mine in Yorkshire is to produce a polyhalite-based fertilizer, which Sirius will bring to market under the brand name Poly4.
Poly4 fertilizer includes 14% potassium, 19.5% sulphur, 6% magnesium, and 17% calcium.