FRONT runner to produce and export Australia's first Sulphate of Potash (SoP) fertiliser, Salt Lake Potash Ltd (SO4) has secured $291 million it needs to take its Lake Way, Wiluna, project into production next year.
SO4 told the Australian Securities Exchange (ASX) last week it has secured a four-year US$138m ($192.5m) finance agreement with a syndicate comprising a United States private equity fund and Australia's Clean Energy Finance Corporation (CEFC).
Taurus Funds Management Pty Ltd through its Delaware-based Taurus Mining Finance Fund No. 2, has agreed to provide up to US$91m, while the Federal government's CEFC will provide up to US$47m for SO4's fast-tracked SoP fertiliser project.
A further $98.5m will be raised by a fully underwritten institutional share placement and one new share for every 3.2 existing shares accelerated non-renounceable entitlement offer, SO4 told the ASX.
SO4 expects the institutional offer of 86.7 million new 50 cents shares to raise $43.4m and the entitlement offer of 110.4m 50c shares to raise $55.2m.
Take up of both share offers is expected to be finalised tomorrow, Friday, August 14.
The 197.1m new shares to be issued under the equity raising represents about 56 per cent of SO4's existing issued stock.
It told the ASX it has until June 30 next year to take up the debt financing offer from Taurus and CEFC, with no scheduled repayments or debt amortisation until March 31, 2022, about a year after anticipated first commercial SoP fertiliser production at Lake Way, a salt lake 15 kilometres south of Wiluna.
SO4 aims to begin commercial production in the first quarter next year of a low-chloride premium powder SoP fertiliser grading at greater than 53pc potassium oxide, which it expects to sell at a 10pc price premium over standard SoP.
It also intends to produce a fertigation grade water soluble SoP for use in micro-irrigation.
Production is expected to ramp up to 245,000 tonnes of SoP fertilisers a year by the middle of 2022.
As previously reported in Farm Weekly, SO4 fast tracked its SoP fertiliser project by relocating it from Lake Wells, another salt lake north east of Laverton where potential SoP fertiliser competitor Australian Potash Ltd is based, to Lake Way to take advantage of a former open cut gold mine flooded with hypersaline brine.
Brine pumped from the Williamson pit was used as seed stock in SO4's series of enormous solar evaporation ponds to produce potassium-rich harvest salts for processing into SoP fertiliser, but has now been supplanted by brine collected by extensive channels dredged into the salt lake surface.
Apart from using solar evaporation to concentrate harvest salts, SO4 has committed to building a five megawatt solar farm and installing a 2mw battery to help power its production plant and cut greenhouse gas emissions.
SO4 estimates the solar generated electricity will reduce the project's carbon dioxide emissions by 5800t annually.
This was critical to obtaining the CEFC debt funding facility.
Last month SO4 was granted Green Labe' certification for debt related to developing the Lake Way project.
The certification process included a technical review by Wood Canada Ltd of greenhouse gas emissions from SoP production at Lake Way compared to Mannheim SoP production overseas.
It concluded a Mannheim process plant of comparable capacity would have 60pc higher carbon dioxide emissions than the Lake Way project.
The Mannheim process uses sulphuric acid and furnace heat to convert high-chloride Muriate of Potash (MoP) into low-chloride SoP and is used for about 40pc of the world's SoP production, particularly in China.
Federal Energy and Emissions Reduction Minister Angus Taylor said SO4's SoP fertiliser project could create a new export industry for Western Australia while also helping to meet the growing demand for food in Australia.
"Australian farmers are among the most efficient farmers in the world and they will benefit from having access to new low-emissions fertiliser to improve crop productivity and help lower emissions in the agricultural sector," Mr Taylor said.
"This project will also create new regional jobs at an important time as the Australian economy recovers from COVID-19."
It will create about 430 full-time construction jobs and more than 100 ongoing jobs, including opportunities for local indigenous communities - SO4 already employs 20 indigenous workers, mostly from Wiluna and has committed to employing a further 20.
CEFC chief executive officer Ian Learmonth said, "Low emissions SoP production is an exciting new Australian industry with the potential to substantially reduce greenhouse gas emissions associated with the hard-to-abate agricultural sector".
"Demand for SoP outside China is growing by about 3pc a year and this is expected to continue as the world grapples with the question of how to produce more food, more sustainably and under increasingly difficult farming conditions,'' Mr Learmonth said.
"Using sustainably produced SoP means we can continue to decarbonise agriculture while meeting the growing demand for food.
"At the same time, we are supporting the development of a new export industry for WA, providing another great example of the economic benefits of transitioning to lower emissions."
SO4 chief executive officer Tony Swiericzuk said the company intended to set new sustainable benchmarks for Australian industry and demonstrate how resources projects can be decarbonised economically.
"Using the sun as the primary energy source for concentrating brine and powering our processing facility, we aim to set new standards in sustainability in both the fertiliser and broader natural resources industries," Mr Swiericzuk said.
"Completion of this financing package is a major milestone in SO4's evolution.
"It enables the company to deliver the Lake Way project on schedule and sets up the business for growth into the future as we pursue our vision of a multiple-lake SoP province in Western Australia.
"It is the culmination of a years' work and we would like to thank our financiers Taurus, the CEFC and our shareholders for their support in facilitating the development of a new export industry for Australia."
The latest National Greenhouse Gas Inventory for the December quarter 2019 found agriculture accounted for 12.9pc of Australian emissions, with about 4pc of agricultural emissions from fertiliser use.
Australian fertiliser emissions are forecast to increase by 50pc by 2030.
The CEFC has committed more than $470m across WA's renewable energy, energy from waste, bioenergy, resources and property sectors since 2013.
