Archer Daniels Midland (ADM) has agreed to supply Sirius with a starch-based binding agent, used in the POLY4 fertiliser production process, for an initial period of five years from the commencement of production with renewal options written into the arrangement.
Sirius will design and construct a binder handling facility with the support and expertise of ADM, at or close to, Sirius's materials handling facility in Teesside.
ADM will continue its existing research and development programme on binders for POLY4 for a further period of three years. These research activities will help to evolve processes to develop the most efficient and effective methods for the granulation of POLY4.
The US company plans to assess how best to service the contract with Sirius and this may include the construction of a new processing facility close to Sirius’s operations in Teesside.
Expanded #partnership with Archer Daniels Midland Company @ADM_Farm_Direct, a Fortune 500 US-based #agribusiness who have been confirmed as our #NorthAmerican @SM_POLY4 offtake partner.— Sirius Minerals (@siriusminerals) July 31, 2018
View the RNS here: https://t.co/oVlt1f81Rf#SXX #RNS #LondonStockExchange #FTSE pic.twitter.com/ilN8vlw1SG
ADM already has a relationship with Sirius, having entered into an off-take agreement with the UK company in 2014; the agreement was subsequently expanded in 2015. At the time the off-take agreements were signed, ADM's identity was kept a secret.
"Sirius has been working with ADM for more than four years and today's announcement further strengthens our relationship by securing ADM as an important supplier and as a customer aligning our interests for the long-term and demonstrating the significant role POLY4 will play in the world fertiliser markets," said Chris Fraser, the managing director and chief executive officer of Sirius.
Scott Nagel, the president of ADM Fertilizer, said the company was an early adopter of POLY4 and the agreement announced today would enable it to expand into the Mexican market with the POLY4 offering.
“The opportunity to expand our distribution into the Mexican market with a product like POLY4 supports the overall growth strategy of our business. We are pleased that Sirius sees the benefits of the efficient distribution system we have built in North America and we are looking forward to adding POLY4 to our portfolio of fertiliser products," Nagel said.
The Liberum mining team provided a bit more detail about the existing relationship between ADM and Sirius, explaining that ADM had opted to remain anonymous when it signed a 1.5mln tonnes per annum (mtpa) binding take-or-pay supply agreement three years ago.
“Its naming as an off-take partner today adds to the public endorsement of POLY4 as a product,” Liberum suggested.
Shares in Sirius were up 4.3% to 37.2p on the news.
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