Sirius Minerals signs offtake agreement with ITL Trading

Sirius Minerals announced the signing of a binding take-or-pay offtake agreement to supply POLY4 to Intercontinental Trade DMCC Dubai (ITL Trading).

The FTSE 250 company described ITL Trading as a “global trading company” with an active presence in Europe, Africa, the Middle East and Asia.

It said it specialises in supplying Nigerian and West African clients with globally sourced products and services that were described as “critical” to “laying the foundations for a modern economy”.

ITL Trading had been in business for more than 25 years, and was headquartered in Dubai.

It remained one of the largest suppliers of fertiliser into Nigeria, and through related companies had access to distribution and logistics infrastructure including storage, port concessions and NPK blending facilities.

The supply agreement is a seven-year agreement from first production, for volumes of POLY4 increasing to 350,000 tonnes per annum in year four and provides for exclusive marketing rights into Nigeria.

Sirius said the agreement had a pricing mechanism linked to a relevant product benchmark and is consistent with the company's existing portfolio of agreements.

Taking the agreement into consideration, the company's peak contracted sales volumes had increased from 4.4 Mtpa to 4.7 Mtpa.

“Africa is a huge potential market for POLY4 and we are very pleased to establish our initial footprint in Nigeria, which is the largest market in West Africa,” said Sirius managing director and CEO Chris Fraser.

“Nigeria is positioned as the key market for fertilizer growth in the region and we believe ITL Trading will be a fantastic long-term partner for the company.

“We continue to make good progress on all aspects of our project and are in active discussions with potential customers in other key markets such as Europe, India and Brazil in order to support the stage 2 financing.”

Preetpal Walia, managing director of ITL Trading, added that the Nigerian fertilizer market was undergoing “strong growth”, saying there was “tremendous potential” for multi-nutrient products which could deliver balanced fertilisation.

“We see POLY4 as being an ideal product to meet this opportunity and are very pleased to be entering into this long-term arrangement.”