Chinese DianHuang confirms huge UK fertiliser deal
Staff Writer | May 17, 2017
A small Chinese company that is key to plans by Sirius Minerals to build a huge fertilizer mine under a national park in the north of England has confirmed it has a binding agreement with the UK firm.Article continues below
DianHuang CEO Wang Xiaotian reiterated the agreement in a letter to Reuters on May 15, saying it had been signed on May 27 last year.
DianHuang would buy 150,000 tonnes of the mineral polyhalite a year from first extraction in 2021, scaling up to a million tonnes a year over five years as part of plans to grow peony flowers and extract edible oil from their seeds, he said.
The reassurance from Wang followed a May 8 telephone interview with Reuters in which he said the two firms were still negotiating.
The DianHuang deal is the biggest take-or-pay agreement Sirius has inked so far with a named customer.
By demonstrating confirmed demand for its product, it helped Sirius raise $1.2 billion in financing for the mine and win planning permission from the North York Moors national park.
Sirius needs its existing take-or-pay agreements and more to raise a further $2.6 billion, in debt financing, to complete the mining project.
The company has said it must double the amount of polyhalite covered by take-or-pay deals to satisfy the banks arranging the financing that it has enough potential cash flow. ■ What to read next
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