LONDON/SHANGHAI – A small Chinese company that is key to plans by Sirius Minerals to build a huge fertilizer mine under a national park in the north of England has confirmed it has a binding agreement with the UK firm.
DianHuang CEO Wang Xiaotian reiterated the agreement in a letter to Reuters on May 15, saying it had been signed on May 27 last year. DianHuang would buy 150,000 tonnes of the mineral polyhalite a year from first extraction in 2021, scaling up to a million tonnes a year over five years as part of plans to grow peony flowers and extract edible oil from their seeds, he said.
The reassurance from Wang followed a May 8 telephone interview with Reuters in which he said the two firms were still negotiating. The DianHuang deal is the biggest take-or-pay agreement Sirius has inked so far with a named customer. By demonstrating confirmed demand for its product, it helped Sirius raise $1.2 billion in financing for the mine and win planning permission from the North York Moors national park.
Sirius needs its existing take-or-pay agreements and more to raise a further $2.6 billion (2 billion pounds), in debt financing, to complete the mining project. The company has said it must double the amount of polyhalite covered by take-or-pay deals to satisfy the banks arranging the financing that it has enough potential cash flow.
Asked if DianHuang had signed a legally binding agreement with Sirius, Wang had said by telephone: “We have not officially signed this, it is just a strategic cooperation agreement … Because with Sirius we have a framework cooperation, of course we hope this cooperation can be pushed forward.”
For the rest of this article, click here: http://uk.reuters.com/article/uk-mining-sirius-idUKKCN18D0VM