Supply and distribution agreement with MuntajatSource: RNS
11 October 2019
Sirius Minerals Plc
Major supply and distribution agreement with Muntajat
§ Muntajat is a state-owned Qatari company which markets and distributes approximately 9 million tonnes of fertilizer per annum
§ Ten-year supply and distribution agreement with Muntajat into Africa, Australia, New Zealand and certain Middle Eastern and Asian territories
§ Contracted volumes increase to c.2.0 Mtpa in year five and peak at 2.1 Mtpa in year eight - taking Sirius' aggregate peak sales volumes to 13.8 Mtpa
Sirius Minerals Plc ("Sirius" or the "Company"), through its subsidiary York Potash Ltd, has entered into an exclusive ten-year supply and distribution agreement with Qatar Chemical and Petrochemical Marketing and Distribution Company Q.P.J.S.C ("Muntajat"), for the sale and distribution of volumes of POLY4 into Africa (except Nigeria and Egypt), Australia, New Zealand and certain remaining Middle-Eastern and Asian territories (the "Agreement").
Chris Fraser Managing Director and CEO of Sirius, comments:
"We are delighted to expand our growing partnership with Qatar through this long-term supply agreement with Muntajat. Qatar is already a major investor in Sirius via QIA and Sirius is working with Muntajat to explore the downstream combination of POLY4 with nitrogen products in Qatar and/or the United Kingdom to create a value-added multi-nutrient fertilizer. This new supply agreement with Muntajat provides us with access to a number of new markets for POLY4 and further underpins the large scale, international market appetite for POLY4, lifting our aggregate peak sales volumes to 13.8 Mtpa."
Abdulrahman Ali Al-Abdulla, Chief Executive Officer of Muntajat, comments:
"We see tremendous potential in POLY4 and Sirius' Project which will enable us to bring this multi-nutrient product to our extensive global customer network. The addition of POLY4 will complement our existing portfolio and will enable us to provide a more complete solution to our customers in these important markets by adding additional macro-nutrients to our portfolio."
Background to Muntajat
Muntajat is a state-owned Qatari company established in 2012 which markets, distributes and sells over 16 million tonnes per annum ("Mtpa") of fertilizer, polymer, chemical and steel products including approximately 9 Mtpa of fertilizer. Muntajat represents and is exclusively responsible for the global sales and distribution of products from 15 major industrial production entities in Qatar and for marketing, selling and distributing all of Qatar's fertilizer production. Muntajat has a global marketing network servicing more than 3,000 customers in 135 countries from Doha and 17 international locations.
Qatar is one of the largest urea producers in the world with a 14 per cent. share of world supply and produces approximately 5.6 Mtpa of urea as well as 3.8 Mtpa of ammonia and 2.3 Mtpa of sulphur.
The Agreement provides for the exclusive distribution of POLY4 for a 10-year term that commences from commercial operations and includes a five-year extension option. Minimum volumes relating to the specific territories under the Agreement increase, in aggregate, to approximately 2.0 Mtpa in year five and further to 2.1 Mtpa in year eight. The Agreement takes Sirius' aggregate peak sales volumes to 13.8 Mtpa and peak contracted production in any one year to 12.2 Mtpa, excluding options.
The Company may terminate Muntajat's distribution rights under the Agreement in relation to a specific territory, if Muntajat fails to distribute 75 per cent. of the contracted minimum volumes for such territory over a three-year rolling period. In addition to customary termination rights for both parties, Muntajat has the right to terminate the Agreement in the event that Sirius does not meet certain financing or operational milestones.
The pricing mechanism in the Agreement is linked to downstream pricing received by Muntajat on the sale of POLY4 and incentivises Muntajat to optimise the best FOB netback price for Sirius. Sirius expects the Agreement to deliver pricing in line with its average price expectations across the current supply agreement portfolio.
Expanding partnership with Qatar
In addition to the Agreement, Sirius is working with Muntajat to explore the downstream combination of POLY4 with nitrogen products in Qatar and/or the United Kingdom to create a value-added multi-nutrient fertilizer.
The Agreement expands the Company's existing relationship with the state of Qatar, which, through the Qatar Investment Authority ("QIA"), is one of the largest investors in Sirius.
For further information, please contact:
Sirius Minerals Plc
Jennifer Wyllie, Tristan Pottas
Tel: +44 845 524 0247
Alex Simmons, Ed Brown
Tel: +44 7970 174 353
Tel: +44 7540 412 298
This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations. The person responsible for making this announcement on behalf of the Company is Nick King (Company Secretary).
About Sirius Minerals Plc
Sirius Minerals Plc is focused on bringing large scale volumes of POLY4 to the global agriculture industry. POLY4 is the Company's trademarked name for its unique multi-nutrient fertilizer to be produced from the world's largest and highest grade polyhalite deposit located in North Yorkshire, United Kingdom, which can be used to increase balanced fertilization around the world. Sirius Minerals' shares are traded on the Premium List of the London Stock Exchange. Its shares are also traded in the United States on the OTCQX through a sponsored ADR facility. Further information on the Company can be found at: www.siriusminerals.com.
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