TORONTO (miningweekly.com) – US fertiliser producer Mosaic on Monday announced that it had signed a definitive accord to buy CF Industries’ phophate business for $1.2-billion in cash.

The company would also pay $200-million to fund CF Industries' asset retirement obligation escrow.

Under the terms of the agreement, Mosaic would acquire the 8 900 ha South Pasture phosphate mine and beneficiation plant in Hardee county, Florida, a phosphate manufacturing facility in Plant City, and ammonia terminal and finished product warehouse facilities in Tampa.

CF Industries' facilities currently produce about 1.8-million tonnes of phosphate fertiliser a year, which would add Mosaic’s current output of about 8.2-million tonnes a year.

The acquisition was expected to add about $0.30 a share to Mosaic's 2015 earnings on a per share basis, excluding any debt financing costs and any changes to the outstanding share count.

Mosaic said the proximity of CF Industries' South Pasture mine to Mosaic's planned Ona phosphate mine, in Hardee county, would allow it to take advantage of the synergies associated with the combined mining assets, which would result in Mosaic saving about $500-million by not having to construct a $1-billion beneficiation plant.

Mosaic would instead invest about $500-million to develop phosphate rock reserves and improve existing mines.

Mosaic and CF Industries also signed strategic supply agreements under which CF Industries would provide Mosaic with up to about one-million tonnes a year of ammonia.

Under one agreement, Mosaic would buy up to 725 000 t/y for 15 years from 2017, with the pricing based on a formula tied to the prevailing price of US natural gas.

Under a second agreement, Mosaic would buy about 270 000 t/y for three years from CF Industries' Trinidad operations, which would allow it to cancel its proposed $1.1-billion ammonia manufacturing plant at Faustina, Louisiana.

The transaction was expected to close in the first half of 2014.

Mosaic’s NYSE-listed stock rose 1.33% to $46.55 in morning trade.