A mineral feed ingredient distributor in North America has committed to buying 50,000 tons per year of the mineral, a multi-nutrient form of potash containing potassium, sulphur, magnesium and calcium, under the seven-year ‘take-or-pay offtake’ agreement.
“Take-or-pay, as opposed to a normal offtake agreement, is a very firm commitment to take and pay for an agreed volume of product, regardless of what that business’ channel might look like in the future,” explained J.T Starzecki, Sirius Minerals’ sales and marketing director.
He told FeedNavigator that he wasn’t at liberty to disclose the name of the distributor, as this could jeopardize the company’s current supply.
“In that industry there is a lot of pressure applied by existing producers to maintain relationships, so suppliers who say they are going to buy product elsewhere may risk their current supply,” he explained.
This latest agreement means Sirius has now allocated 6.9 million tons of the York Potash Project’s expected production, which is due to come on stream in the second half of 2018.
“We’re at the tail end of the planning process which will give us permission to construct the mine,” confirmed Starzecki.
Animal feed #2 channel
Animal feed is likely to be the second largest market for Sirius’ POLY4 branded polyhalite, with fertilizers the main outlet for the mineral.
“The animal feed space seems to offer higher margins, and many of our customers in the fertilizer industry are also active in animal feed, which gives us the opportunity to maximize relationships with those customers,” said Starzecki, explaining the firm’s reasons for targeting animal feed.
Testing results have confirmed POLY4’s viability as a mineral feed additive, providing essential minerals which promote optimum animal health and livestock production performance.
Starzecki said that on the back of this agreement Sirius would initially be focusing on the cattle feed market but that it also had plans to test the vitamin-mineral supplement on poultry and swine, which could lead to other opportunities.
He said the main advantage for feed producers was that the product could replace other sources of potassium, sulphur, magnesium and calcium in existing feeds with one single source of all four minerals.
“Rather than having to procure several minerals from different sources, producers will be able to buy them all in one form. Sourcing, transporting and blending from a single input will bring cost efficiencies and enable them to increase their margins,” said Starzecki.
He said POLY4 would go head to head with Dynamate from Mosaic, and that pricing would be in line with the competition.