Agrimin signs third long-term offtake deal for Mackay sulphate of potash

Western Australia-based Agrimin (ASX: AMN) has signed a binding agreement to supply sulphate of potash (SOP) to US-company Gavilon Fertilizer LLC from its Mackay project in the state’s Kimberley region.

The seven-year deal represents the third long-term offtake agreement secured for the project, which is slated to commence production in mid-2026.

Under the terms of the deal, Gavilon will purchase an initial 30,000 tonnes per annum and 40,000tpa during Agrimin’s ramp up period at Mackay, with this building to 50,000tpa of SOP during steady state production.

The product will be sold and distributed to Gavilon’s agricultural customers in the US.

Market prices

While the value of the contract has not been disclosed, Agrimin confirmed the product would be set at market prices, less netback costs and a marketing fee.

Gavilon is a leading wholesaler of NPK (nitrogen, phosphorus and potassium) bulk blending grade fertilisers and has one of the largest distribution systems throughout major US growing areas including on railroads, rivers and ports.

The company imports and manages a portfolio of essential plant nutrition products, soluble fertilisers and enhanced efficiency fertilisers in bulk.

Long-term agreements

Agrimin has now secured long-term offtake agreements for a total of 315,000tpa of its low carbon, organic SOP, representing 70% of the Mackay project’s planned production capacity of 450,000tpa.

In May last year, the company signed a 10-year binding offtake agreement with Sinochem Fertiliser Macao for the supply of 150,000tpa into China.

China is the world’s largest SOP market and currently accounts for more than half of all global demand.

In January, Agrimin signed a seven-year agreement with Nitron Group for the supply of 115,000tpa into Latin America, Mexico, the Caribbean and Africa.

Calibre of customers

Agrimin chief executive officer Mark Savich said the Gavilon deal adds weight to the calibre of customers that have lined up for Mackay’s product.

“Gavilon is another tier one offtake partner for us and we look forward to partnering with the company to successfully market and sell our SOP throughout the US,” he said.

“The region represents an important market for us and we are delighted to secure a partner which has one of the largest and most efficient wholesale fertiliser distribution networks in that country.”

He said the long-term offtakes are a significant milestone as Agrimin advances the Mackay project to a final investment decision.