Canadian fertilizer firm Canpotex signed a new three-year initial potash supply deal with China’s Sinochem Fertilizer Macao Commercial Offshore Ltd. (Sinofert), calling for the sale of a minimum of 1.9 million tonnes of red standard grade potash over the term of the agreement.
Sinofert also has the option to buy up to 2.4 million tonnes, or 800,000 metric tons per year, of other grades of potash during the term of the Memorandum Of Understanding, according to a statement issued late yesterday by Canpotex, the offshore sales arm of some of Canada's leading potash producers-- PotashCorp (TSE:POT), Agrium (TSE:AGU) (NYSE:AGU) and Mosaic (NYSE:MOS).
Pricing will be negotiated every six months--January to June and July to December, based on market conditions, according to the statement.
The deal covers the period January 1, 2015, to December 31, 2017.
Canpotex said the deal is "designed to encourage future growth in new Canpotex product grades and new market regions in China as it provides exclusivity to Sinofert for Canpotex red standard grade potash only, provided Sinofert exercises the annual minimum purchase requirements."
"We have been supplying Saskatchewan potash to China since 1972, and with this agreement we will continue to be a leading supplier to this growing market," Canpotex president and CEO Steve Dechka said in the statement.