Shares in Sirius Minerals (LON:SXX), the British company building a huge fertilizer mine beneath a national park, jumped on Thursday after it announced it had secured a ten-year supply and distribution deal in Europe.
The agreement with BayWa Agri Supply & Trade, will see the German agribusiness buy up to 2.5 million tonnes a year of polyhalite, a form of potash that is used in plant fertilizers. That amount is expected to ramp up after year five.
Sirius said the contract would deliver the highest pricing of any of the supply agreements it has so far inked around the world, which now total more than 10 million tonnes per year.Sirius' Woodsmith mine will generate an initial 10 million tonnes per year of polyhalite - a form of potash used in plant fertilizers
"The European fertilizer market is highly advanced and the second largest in the world behind China," Sirius Managing Director and CEO, Chris Fraser, said in the statement. "We are delighted to be partnering with a leading agribusiness to distribute our POLY4 product into this key market."
The news comes as the miner seeks to raise $3 billion to finish building its Woodsmith fertilizer project in North Yorkshire.
Sirius has already raised $1.4 billion from investors, including $250 million from Australia's richest woman, mining magnate Gina Rinehart, but has struggled to secure a loan backed by the UK government.
The Woodsmith mine, poised to be one of the world's largest in terms of the amount of resources extracted, is set to generate an initial 10 million tonnes per year of polyhalite. That figure will double once it reaches full capacity by 2024..
The operation involves sinking two 1.5km shafts below a national park on the North York Moors and is expected to create about 1,800 jobs during construction, as well as 1,000 permanent positions once it opens, in May 2021.
The ore will be extracted via the two mine shafts and transported to Teesside on the world's longest underground conveyor belt via a 37km-underground tunnel. It will then be granulated at a materials handling facility, with the majority being exported to overseas markets.
The company's shares climbed 5.9% to $20.98 on the announcement, but the stock has fallen from a peak of $39.85 over the last 13 months. Sirius has a $1 billion market capitalization.