Agriculture

Sirius Minerals is working on developing its world-class polyhalite deposit in the UK. Polyhalite is a mulit-nutrient used as a direct-application fertilizer.

Sirius Minerals (LSE:SXX) increased its mineral resource estimate at the York potash project, located in North Yorkshire in the United Kingdom. The increase has upgraded the total mineral resource to 2.66 billion tonnes at an average grade of 85.7-percent polyhalite — an upgrade of 820 million tonnes in the indicated category and 1.84 billion tonnes in the inferred category. York is one of the largest and highest-grade polyhalite resources in the world.

Chris Fraser, Sirius’ managing director and CEO, commented that the size of the resource is no surprise. “The scale and quality of the York Potash deposit has been known about for some time, but the upgrade to an Indicated status is another key milestone for the Project and one that will give further comfort in the strength of the Project and this globally significant deposit.”

What is polyhalite?

Polyhalite, for those who are unfamiliar, is a multi-nutrient containing four of the six macro-nutrients required for plant growth. It is an evaporite mineral that hosts sulfate of potassium, calcium and magnesium and is low in chlorine.

The immediate focus of development of York will target production of large-scale “granulated polyhalite as a direct application fertilizer, and as a main source of potassium for the production of nitrogen, phosphorus and potassium fertilizers (NPK),” according to Sirius. York also has room for expansion, with options to produce sulfate of potash (SOP) and muriate of potash (MOP) at later stages.

Challenge accepted

One of the primary challenges faced by Sirius Minerals “[i]n this market would be to fund the sizeable capital expenditure requirements, assuming permitting success in Yorkshire,” analysts told Interactive Investor UK.

At the end of April, the company confirmed that the York project is viable and said it was in the early discussions with lenders to raise $2.5 billion. “At this stage what we are looking at is a series of options, debt finance from either bond markets, banks but also looking at potential longer-term strategic partnerships with customers,” Fraser told Reuters.

Marketing polyhalite

Currently, polyhalite is sold in small volumes as a specialty fertilizer in Europe. Sirius’ strategy is to sell granulated polyhalite on a large scale. The company is targeting key markets, including Brazil, China and India, to meet the demands of their developing populations.

To assist in attaining its goal, Sirius recently inked an agreement with KEYTRADE, one of the world’s leading fertilizer trading, distribution and marketing companies. KEYTRADE will market up to 1.75 million tonnes per annum of polyhalite from York, which is currently under development.

Melih Keyman, president and CEO of KEYTRADE, believes that there is a significant global market for polyhalite and that the project’s resource as well as the unique characteristics of polyhalite are in line with global agricultural requirements.

Following the agreement with KEYTRADE, Citi Group Global Markets and Liberum Capital have maintained their “buy” recommendation for the company.

 

Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article. 

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