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EXCLUSIVE: Chinese company confirms huge UK fertiliser deal

Reuters  |  LONDON/SHANGHAI 

By Alasdair Pal and Adam Jourdan

LONDON/(Reuters) - A small Chinese company that is key to plans by Minerals to build a huge fertilizer mine under a national park in the north of has confirmed it has a binding agreement with the firm.

DianHuang CEO Wang Xiaotian reiterated the agreement in a letter to 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 in which he said the two firms were still negotiating.

The DianHuang deal is the biggest take-or-pay agreement has inked so far with a named customer. By demonstrating confirmed demand for its product, it helped raise $1.2 billion in financing for the mine and win planning permission from the North York Moors national park.

needs its existing take-or-pay agreements and more to raise a further $2.6 billion, in debt financing, to complete the 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.

Asked if DianHuang had signed a legally binding agreement with Sirius, Wang had said by telephone: "We have not officially signed this, it is just a strategic cooperation agreement ... Because with we have a framework cooperation, of course we hope this cooperation can be pushed forward."

These were the first comments to media by the Chinese company on the deal, which announced in June 2016. At that time, said DianHuang would buy up to a million tonnes of fertiliser a year from first extraction, under a take-or-pay arrangement.

In the telephone interview, Wang had said DianHuang was also negotiating with a rival firm, ICL, also known as Israel Chemicals.

"It depends whose fertilizer is more beneficial for us," he said. "ICL is the biggest global producer of organic potassium fertilizer. They are also competing, they are also in touch with us. They have brought over some fertilizer for test use."

ICL, whose mine is on the same Yorkshire seam that plans to exploit, declined to comment on DianHuang's statement.

After posed questions to Minerals about Wang's phone comments, said the assertion that it only had a framework agreement with DianHuang was incorrect: "The Company has a binding offtake agreement in place."

added that any possible talks between DianHuang and its rival were up to the Chinese firm.

In Wang's letter, which he wrote after contacted Sirius, he said: "To clarify, the contract is not a framework agreement but rather a firm take or pay agreement." Wang was not immediately available to comment further when contacted by after the letter.

ICL is so far the only company that has actually begun polyhalite, a relatively new entrant to the fertiliser market which both it and say is a multi-nutrient product superior to traditional potash. Wang's follow-up letter to made no reference to ICL.

has announced take-or-pay agreements for up to 3.6 million tonnes a year of its polyhalite product so far. It has not named some customers for commercial reasons. That is about half what it says it needs to complete the project.

It says the mine will create thousands of jobs and add as much as 2.4 billion pounds ($3.11 billion) per year to the United Kingdom's gross domestic product.

(Editing by Lina Saigol and Philippa Fletcher)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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EXCLUSIVE: Chinese company confirms huge UK fertiliser deal

LONDON/SHANGHAI (Reuters) - 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.

By Alasdair Pal and Adam Jourdan

LONDON/(Reuters) - A small Chinese company that is key to plans by Minerals to build a huge fertilizer mine under a national park in the north of has confirmed it has a binding agreement with the firm.

DianHuang CEO Wang Xiaotian reiterated the agreement in a letter to 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 in which he said the two firms were still negotiating.

The DianHuang deal is the biggest take-or-pay agreement has inked so far with a named customer. By demonstrating confirmed demand for its product, it helped raise $1.2 billion in financing for the mine and win planning permission from the North York Moors national park.

needs its existing take-or-pay agreements and more to raise a further $2.6 billion, in debt financing, to complete the 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.

Asked if DianHuang had signed a legally binding agreement with Sirius, Wang had said by telephone: "We have not officially signed this, it is just a strategic cooperation agreement ... Because with we have a framework cooperation, of course we hope this cooperation can be pushed forward."

These were the first comments to media by the Chinese company on the deal, which announced in June 2016. At that time, said DianHuang would buy up to a million tonnes of fertiliser a year from first extraction, under a take-or-pay arrangement.

In the telephone interview, Wang had said DianHuang was also negotiating with a rival firm, ICL, also known as Israel Chemicals.

"It depends whose fertilizer is more beneficial for us," he said. "ICL is the biggest global producer of organic potassium fertilizer. They are also competing, they are also in touch with us. They have brought over some fertilizer for test use."

ICL, whose mine is on the same Yorkshire seam that plans to exploit, declined to comment on DianHuang's statement.

After posed questions to Minerals about Wang's phone comments, said the assertion that it only had a framework agreement with DianHuang was incorrect: "The Company has a binding offtake agreement in place."

added that any possible talks between DianHuang and its rival were up to the Chinese firm.

In Wang's letter, which he wrote after contacted Sirius, he said: "To clarify, the contract is not a framework agreement but rather a firm take or pay agreement." Wang was not immediately available to comment further when contacted by after the letter.

ICL is so far the only company that has actually begun polyhalite, a relatively new entrant to the fertiliser market which both it and say is a multi-nutrient product superior to traditional potash. Wang's follow-up letter to made no reference to ICL.

has announced take-or-pay agreements for up to 3.6 million tonnes a year of its polyhalite product so far. It has not named some customers for commercial reasons. That is about half what it says it needs to complete the project.

It says the mine will create thousands of jobs and add as much as 2.4 billion pounds ($3.11 billion) per year to the United Kingdom's gross domestic product.

(Editing by Lina Saigol and Philippa Fletcher)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

EXCLUSIVE: Chinese company confirms huge UK fertiliser deal

By Alasdair Pal and Adam Jourdan

LONDON/(Reuters) - A small Chinese company that is key to plans by Minerals to build a huge fertilizer mine under a national park in the north of has confirmed it has a binding agreement with the firm.

DianHuang CEO Wang Xiaotian reiterated the agreement in a letter to 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 in which he said the two firms were still negotiating.

The DianHuang deal is the biggest take-or-pay agreement has inked so far with a named customer. By demonstrating confirmed demand for its product, it helped raise $1.2 billion in financing for the mine and win planning permission from the North York Moors national park.

needs its existing take-or-pay agreements and more to raise a further $2.6 billion, in debt financing, to complete the 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.

Asked if DianHuang had signed a legally binding agreement with Sirius, Wang had said by telephone: "We have not officially signed this, it is just a strategic cooperation agreement ... Because with we have a framework cooperation, of course we hope this cooperation can be pushed forward."

These were the first comments to media by the Chinese company on the deal, which announced in June 2016. At that time, said DianHuang would buy up to a million tonnes of fertiliser a year from first extraction, under a take-or-pay arrangement.

In the telephone interview, Wang had said DianHuang was also negotiating with a rival firm, ICL, also known as Israel Chemicals.

"It depends whose fertilizer is more beneficial for us," he said. "ICL is the biggest global producer of organic potassium fertilizer. They are also competing, they are also in touch with us. They have brought over some fertilizer for test use."

ICL, whose mine is on the same Yorkshire seam that plans to exploit, declined to comment on DianHuang's statement.

After posed questions to Minerals about Wang's phone comments, said the assertion that it only had a framework agreement with DianHuang was incorrect: "The Company has a binding offtake agreement in place."

added that any possible talks between DianHuang and its rival were up to the Chinese firm.

In Wang's letter, which he wrote after contacted Sirius, he said: "To clarify, the contract is not a framework agreement but rather a firm take or pay agreement." Wang was not immediately available to comment further when contacted by after the letter.

ICL is so far the only company that has actually begun polyhalite, a relatively new entrant to the fertiliser market which both it and say is a multi-nutrient product superior to traditional potash. Wang's follow-up letter to made no reference to ICL.

has announced take-or-pay agreements for up to 3.6 million tonnes a year of its polyhalite product so far. It has not named some customers for commercial reasons. That is about half what it says it needs to complete the project.

It says the mine will create thousands of jobs and add as much as 2.4 billion pounds ($3.11 billion) per year to the United Kingdom's gross domestic product.

(Editing by Lina Saigol and Philippa Fletcher)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22