Mr. Brian Ostroff reports
ARIANNE ENTERS INTO A MEMORANDUM OF UNDERSTANDING PARTNERING TO EXPLORE DOWNSTREAM PRODUCTION OF PHOSPHORIC ACID
Arianne Phosphate Inc. hassigned a memorandum of understanding with a major global producer of sulphuric acid to explore the possibility of setting up a downstream operation that would produce phosphoric acid.
Although currently at an early stage of discussion, the venture is assessing the construction of a facility capable of producing a high-quality phosphoric acid that could produce for both the fertilizer market and for specialty applications. The facility would see the delivery of Arianne Phosphate's high-purity phosphate rock along with sulphuric acid provided by one of the world's largest producers and suppliers of sulphuric acid.The joint venture would benefit from being able to have direct access to the necessary inputs from producers focused on their specific segment of the market, and thus, the cost and competitive advantages that would come as a result.
"This would certainly be an interesting opportunity for both organizations," said Brian Ostroff, chief executive officer of Arianne Phosphate. "What we know about the industry is that integration is a key driver of profitability, and that's why 85 per cent of the world's phosphate rock production is owned and integrated by the organizations that make the downstream products. Today, there are many operations that are challenged by their reliance on others for their rock supplies, and the risks of this have become very evident with recent unforeseen supply disruptions. This venture would allow both companies to take their currently non-integrated production, combine them and create something of considerable value. It really is a case of one plus one equals three and would create an entity immune from external supply shocks."
The MOU will allow for both companies to combine their respective market knowledge and address how best to move the potential venture forward. Costs, logistics and end-markets will all continue to be reviewed to determine the full extent of the opportunity. Matters such as capacity, end-products and location will be further studied to better assess feasibility and decisions regarding a possible business venture made from that review.
About Arianne Phosphate Inc.
Arianne Phosphate is developing the Lac a Paul phosphate deposits located approximately 200 kilometres north of the Saguenay/Lac St. Jean area of Quebec, Canada. These deposits will produce a high-quality igneous apatite concentrate grading 39 per cent phosphorus pentoxide with little or no contaminants.
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