PROSPECTIVE WA fertiliser producer Salt Lake Potash has signed a memorandum of understanding (MoU) with a leading fertiliser distribution company in China.
Salt Lake Potash, identified as SO4 on Australian Securities Exchange (ASX) listings, announced Tuesday it had executed an MoU with Sinofert Holdings Ltd, it’s second non-binding off-take agreement for Sulphate of Potash (SoP) fertiliser to be produced at its Goldfields Salt Lakes Project (GSLP).
It is hoping to convert the MoUs - the other one is with Mitsubishi Australia Ltd and Mitsubishi Corporation - into formal product marketing, sales and distribution contracts by January 1, 2020, when the MoU with Sinofert is due to come into play.
SO4 told the ASX the latest MoU will give Sinofert sales and off-take rights for up to half of all SoP produced by the GSLP for distribution into China.
The MoU incorporates market pricing, commission mechanisms, SoP specification and delivery parameters and its initial term is for eight years, SO4 said.
Under the MOU Sinofert is to provide strategic advice on marketing in China.
“Sinofert is China’s leading fertiliser supplier and distributor, covering the whole industry chain of resource, R&D (research and development), production, distribution and agrochemical services,” SO4 told the ASX.
“Sinofert handles 13 million tonnes of fertilisers each year and has over 60 years’ experience in fertiliser production and distribution.
“Sinofert is listed on the Hong Kong Stock Exchange and is majority owned by Sinochem Corporation, a key Chinese state-owned corporation,” it said.
As previously reported in Farm Weekly, SO4 is one of three Perth-based companies in a race to produce SoP fertiliser from brine drawn from beneath remote WA salt lakes by early 2020.
Its GSLP covers eight salt lakes in the eastern and northern Goldfields and it intends to construct a “demonstration plant” producing up to 50,000 tonnes per annum of high quality SoP to be marketed “through a small number of global distribution partnerships”.
Once that plant is producing SoP, SO4 intends to progressively expand production across a number of salt lakes.
Its MoU with Mitsubishi covers up to half of the demonstration plant’s production for distribution and sale.
SO4 chief executive officer Matt Syme said the latest MoU was an important step to further establishing distribution channels for its SoP fertiliser.
“Our model of distribution partnerships is vital for what is essentially an export project and Sinofert is the leading participant in the world’s biggest fertiliser market, where more than half of the world’s SoP is both produced and consumed,” Mr Syme said.
Earlier this year SO4 announced plans to fast track its project by establishing its demonstration plant at Lake Way, south of Wiluna, where it intends to use brine pumped from the flooded Williamson Pit gold mine as “starter feed” for evaporation ponds to produce harvest salts for the SoP plant.
In March it announced an MoU with Blackham Resources to utilise the Williamson Pit brine and build its evaporation ponds and demonstration plant on Blackham mining leases to minimise bureaucratic delays.
Also on Tuesday, Blackham announced an $11 million joint venture and farm-in deal whereby Chinese minerals explorer A-Cap Resources can earn a 75 per cent share of its Wiluna nickel and cobalt tenements at its Wiluna gold project.
It is not yet known whether the Blackham-A-Cap deal will have any impact on SO4’s MoU with Blackham and plans to build the demonstration plant at Lake Way.
SO4 had originally intended to build the plant at Lake Wells, 200 kilometres north east of Laverton, where its GSLP has primarily been focussed until this year.
It holds a mining lease and tenements over the northern half of Lake Wells and prospective SoP fertiliser competitor Australian Potash (APC on ASX listings) holds mining leases and tenements over the south-east half of the lake.
As recently reported, SO4 and APC are undertaking an investigation of possibly jointly developing common aspects - including shared production infrastructure - of their near identical adjoining projects to minimise production start-up costs.
Both intend producing SoP fertiliser at Lake Wells from 2020, trucking it to Leonora or nearby Malcolm rail siding and railing it to Esperance port.
Third SoP competitor in the 2020 race, Kalium Lakes Ltd (KLL on ASX listings) became the first, on September 18, to announce completion of a bankable feasibility study supporting its SoP project based on a string of salt lakes north-west of Wiluna.
KLL intends exporting SoP through Geraldton port.
Australia currently imports all of its SoP, about 40,000tpa, but it is believed usage of the low salt index fertiliser could increase to about 75,000tpa if it can be produced locally at a cost low enough to encourage its use in broadacre cropping, particularly in salt affected areas.