CHRIS CLEVERLY African Potash has strengthened its trading presence in Zambia and the Southern African region through the trade agreement with Rockwell
Aim-listed exploration company African Potash has signed a 12-month fertiliser supply agreement, subject to quarterly reviews, with Zambian fertiliser supplier and distributor Rockwell Fertilisers.
Copper-laden Zambia is currently looking to diversify its miningcentric economy to include greater input from other sectors, such as agriculture.
African Potash executive chairperson Chris Cleverly says the company is “delighted” to have further strengthened its trading presence in Zambia and the Southern African region through the trade agreement with Rockwell, which complements its recently announced trading agreement with Zambian nonprofit enterprise Nutri-Aid.
“With a number of strategic partners in place through which we can secure offtake agreements for the purchase of our fertiliser product, and the results of this strategy already showing success, I believe African Potash is well set for continued growth,” he enthuses.
African Potash, which is focused on building a vertically integrated platform for the mining, production and distribution of fertiliser for operations in Africa and sub- Saharan Africa, announced the agreement last month.
The company operates the Lac Dinga project, in the Republic of Congo, which is prospective for potash, a key source of potassium fertiliser, and has a trading agreement, signed in August 2015, with the free trade union for 20 African member States, the Common Market for Eastern and Southern Africa (Comesa), to supply and deliver fertiliser primarily to Africa.
African Potash will supply Rockwell with fertiliser products, namely NPK and urea, to be sold to retail outlets that sell to farmers in Zambia.
The agreement is supported by Comesa and Nutri-Aid Trust, with which the company has a trading agreement to sell urea and other fertiliser products to its supply network.
The network includes more than 2 500 Comesa-certified agro-outlets managed by Nutri-Aid. Each outlet serves an average of 300 farmers. Under the agreement, the expected value and quantity of each order will vary in accordance with buyer demand.
African Potash will receive an upfront payment of 50% of the total order value for each purchase by prospective customers.
The payment of the remaining 50% must be made to African Potash no later than or before 45 days after the relevant invoice has been issued – as is customary for purchase agreements of this nature, explains the company, adding that it needs to meet the costs of stock purchases made from its suppliers.
In consideration for introducing and arranging new customers, Rockwell will receive 30% of the net profit generated from sales of fertiliser products under this agreement, while 70% will be retained by African Potash.
Net profit is determined by the selling price minus the supply price, which includes supply chain costs incurred in the sourcing, storage and movement of fertiliser.
The agreement is in settlement of the previously announced agreement for the supply of 20-billion tons of urea to a customer introduced by Comesa, as announced on January 6 and in subsequent announcements on February 9, March 29 and April 22.
African Potash has confirmed that its ongoing trading agreement, in accordance with a statement made on April 22, is progressing in terms of its contractual commitments.