JOHANNESBURG (miningweekly.com) – Sub-Saharan Africa-focused exploration company African Potash has secured a legally binding supply deal for the sale of 50 000 t of fertiliser to a Zambia-based buyer days after setting a $500/t price tag.
The Aim-listed company would supply 25 000 t of NPK D Compound and 25 000 t of urea to a collateral managed warehouse facility in Zambia for seasonal demand in October and November.
The binding deal implemented the memorandum of understanding (MoU) signed in August and followed on the framework fertiliser supply agreement signed between the parties earlier this week.
“Securing this sales contract means that we are now very close to consummating our inaugural fertiliser trade,” said African Potash executive chairperson Chris Cleverly in an update to shareholders on Thursday.
The achieved sales price would enable African Potash to meet its margin targets, while positioning the company to execute trades under the other MoUs currently being implemented.
The deal, supported by the Common Market of Eastern and Southern Africa (Comesa) and Alliance for Commodity Trade in Eastern and Southern Africa, also delivered a “proof of concept” of the company’s trading facility.
This was the fourth fertiliser supply agreement cemented since the August signing of a three-year trading agreement with Comesa, which identified and introduced potential offtakers to African Potash.
In the past month, African Potash entered into a MoU with a Congolese distributor to supply in excess of 150 000 t of fertiliser into the Democratic Republic of Congo, as well as an MoU to supply 150 000 t of fertiliser to a Zimbabwe-based fertiliser supply company and a 50 000 t/y offtake deal with a Malawi-based fertiliser supply company.
Meanwhile, African Potash continued to negotiate a $50-million trade finance facility to fund its fertiliser trading operations until it was self-funding.