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Sirius Minerals shares up as it inks new sales deal with German agribusiness

Through a new ten-year deal, the UK mine developer expects to sell up to 2.5mln tonnes of its POLY4 fertiliser per year via Germany’s BayWa Agri Supply & Trade
Sirius Minerals POLY 4 fertiliser
The ten-year deal is set to provide the highest prices for POLY4 to date

Sirius Minerals PLC (LON:SXX) shares were higher on Thursday after the firm revealed the latest sales agreement for its new mine in Yorkshire, with European agribusiness, BayWa AG signing a ten-year deal.

Through the deal, which is expected to ramp up over the term, BayWa will receive a minimum of 2.5mln tonnes of polyhalite fertiliser per year by year five. It takes the Sirius future contracted sales up to 10.7mln tonnes, which approximately equates to the mine’s first phase capacity.

READ: Is now the time to invest in Sirius Minerals?

Sirius highlighted that the deal gives it greater downstream pricing exposure in the premium European market.

"The European fertilizer market is highly advanced and the second largest in the world behind China,” said Chris Fraser, Sirius chief executive.

“We are delighted to be partnering with a leading agribusiness to distribute our POLY4 product into this key market. Our exclusive partnership with BAST will enable us to reach downstream customers through the groups' well-established and extensive logistics network and long-term, trusted relationships with farmers.”

Daan Vriens, chief executive of the BayWa Agri Supply & Trade (BAST) business, added: "We are excited to be partnering with Sirius to bring a high performing, multi-nutrient fertilizer like POLY4 to customers across Europe.

“POLY4 fits with our sustainability and farmer services strategies across our markets. This will provide farmers, via our extensive networks, a fertilizer product that promotes sustainable agricultural practice in our home market, Europe."

'Highest prices'

Munich headquartered BayWa distributes agricultural products in the European market, presently including 2mln tonnes of fertilisers per year.

Sirius noted that the supply deal includes a pricing mechanism linked to downstream pricing, determined by the price received by BAST whilst referencing a benchmark price and the ‘nature of the final BAST customer’.

It added that BAST is incentivised to sell the POLY 4 product further down the supply chain – described as those ‘closer to the farm gate’.

The UK miner anticipates that via BAST it will see highest prices across its current supply agreement portfolio.

In afternoon trading, shares in the FTSE 250-listed firm were 3.2% higher at 21.66p.

 -- Adds share price --

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