Eritrea: Fertilizer Production Eurochem Announces Take-Or-Pay Agreement for SOP Output

Editor: Alexander Stark

Eurochem announced a take-or-pay agreement for the purchase of up to 100 % of the expected future Sulphate of Potash (SOP) output from the Colluli Potash Project in Eritrea, East Africa.

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Eurochem's Volga Kaliy project in Russia
Eurochem's Volga Kaliy project in Russia
(Source: Eurochem)

Zug/Switzerland — The contract is for a 10-year term with an option to extend for a further three years. It is the first such agreement by the company in Africa. The deal will provide the fertilizer producer with access to an SOP greenfield project which is to supply the world’s fastest-growing markets.

Owned by the Colluli Mining Share Company (CMSC), the Colluli Potash Project is a 50-50 joint venture between Danakali Limited and the Eritrean National Mining Corporation (Enamco). The project comprises a 1.1 billion tonne JORC-2012 SOP ore reserve containing potassium-bearing salts in solid form that is suitable for potash fertilizer production.

The agreement envisages annual output of 472,000 tonnes, although CMSC has the option to sell up to 13 % of its output through alternative channels. Other commercial terms of the agreement have not been disclosed.

SOP sells at a premium to Muriate of Potash (MOP), a more common potash fertilizer, which the company is beginning to produce in Russia. As the Usolskiy and Volga Kaliy greenfield potash projects come on stream this year, the producer will become one of three companies worldwide to produce fertilizers in all three primary nutrient categories, and a top-five global producer by total nutrient capacity. According to a company statement, some SOP processed at Colluli is intended for the production of complex NPK fertilizers at its facilities in Antwerp, Belgium and Nevinnomyssk, Russia, and the rest will be sold internationally.